My Capstone course (where a group of students create a complete game) is fortunate to have a Sound Designer as one of the eight students on the development team. On a professional development team this might seem like overkill -- the ratio of Game Audio to Everyone Else is usually closer to 1 in 40, not 1 in 8. There are exceptions, but our game isn't one of them.
Anyway, our sound designer comes in on one of the first days of class with a short looping sound for background music. It consisted of two tracks: a light, airy guitar melody and some deep bass drums. They're part of the same rhythm, so it's really just one sound loop divided into two tracks.
Here's the interesting part. By changing the relative volume of these tracks on the fly, the nature of the sound changes. If your avatar is flying through the air, play 90% guitar / 10% drums. If you're deep underground, change to 10% guitar / 90% drums. Walking on the ground, it's 50/50. Same song, but the nature of it changes dynamically based on character location (or health, or proximity of enemies, or what have you). It really sounds like three different songs depending on how you mix it. The programming to support this is absolutely trivial.
I can't think of a single game I've played that does this. Even games with dynamic sound like Shadow of the Colossus and God of War swap in one track for another at specific points in the sound loop, not really blending them. I suspect it took them far more effort from their Programming and Audio departments to achieve the same result that my student was able to do in about twenty minutes.
Has anyone else seen this technique before? Because once you've seen it, it seems like a really obvious thing to do...