OK, here's a quick demo:
http://www.gullen.pwp.blueyonder.co.uk/ ... urtest.zip
There's a normal version and a motion blur version. Move the mouse and use arrow keys to move the objects. Both use a normal 8 direction and mouse movement.
It requires a new-ish ATI or nVidia card to work (Radeon 9500+ or GeForce FX 5700+), otherwise it'll probably give an error. If everyone could try it out and let me know if it works, and your video card model, that'd be useful. Also if you move the mouse really quickly and take a screenshot, you can see step-aliasing (because it uses a fixed number of steps, not one for each pixel of movement like your example), but the result is good enough for the human eye.