Check it out at http://userfly.com/
In short, Userfly captures actual browsing sessions from real users as if you were looking over their shoulder. What we've found is that watching real users actually use your site can be remarkably insightful, so we built Userfly to accomplish that goal.
There's a screencast that will walk you through the basic functionality. Click on the demo button above it to mess around without having to sign up for an account.
Would love your feedback on the idea and its direction!
The main issue is that the sessions aren't focused (you don't know about the goal of the user) and watching tens/hundreds/thousands of recordings to get an idea of what users are or aren't doing on your website is simply impractical.
What, I believe, is really important is summarized data; taking the data and boiling it down to more specific bits of information about how the users are browsing: What are they doing on the page? How long does it take them? Collectively, what is and isn't being focused on? What about how users interact with forms?
These are just some very broad examples, but there are many ways in which you can distill the recorded data, and I find those to be far more insightful than the browsing sessions themselves (look at some of what ClickTale is doing).
There is a lot that can be done in this field (otherwise I wouldn't be working in it myself), but I think recording user sessions is only the very least of it.
Despite my reservations, I'd love to have a chance to further discuss your plans. What would be the easiest way for me to get directly in touch with you? (My email is available via the "Questions? Comments? Contact." link on VisTrac.com)