Director Jim Cameron acknowledged he’s still in post-production on Avatar and has been since March 2008 even before live action photography ended. “I feel like I’ve been living in a cave for a year,” he told the “Produced By” Conference today. He also enthusiastically endorsed the Avatar videogame which debuted at E3 last Monday. “I’m not personally a gamer, but my younger brother Dave is a big gamer,” Cameron noted, and together they made sure they liked it. He noted that “in some cases the videogame branded with film hasn’t been as good as a film.” He didn’t name names, but he said the Avatar game will be “the same quality level” as the movie. Cameron also told the audience he is up-converting Terminator 2 to 3-D if it’s cost effective. But he didn’t mention Titanic even though that 3-D possibility was floated on the Internet this week.

There was a long line at Sony Studios in Culver City to hear Cameron speak. The Producers Guild Of America initially said journalists could cover Cameron’s presentation but then said no at the last minute. (I had a tech pal inside so this report is based on his notes.)

Cameron talked again about how he wrote the script for Avatar back in the mid-1990s when he and Stan Winston co-founded Digital Domain. But when he took the screenplay to their special effects lab, Cameron was told it was just not possible to make the film with the current technology. So he sat on the project for more than a decade.

Cameron and his people on the panel expressed confidence that, by the time Avatar is released by 20th Century Fox on December 18th, there will be “several thousand 3-D screens” capable of showing the film.

He likened where 3-D is right now to the 1930s and 1940s when making color films was considered a “premium” project, and it wasn’t until the early 1970s when filmmakers had to get “permission” to make a black-and-white film. “Unless you have the Woody Allen clause. Then you can make black-and-white films even now. But in 20 years, you’re going to need the Woody Allen clause not to make 3-D.”

Cameron also explained that so much has changed since he shot the Universal Studios Tour’s Terminator 3-D ride: back then in 1995, each camera weighed 235 pounds and he had to shoot it wide open so he used so much light no one else could do night shoots at the same time. For Avatar, he created the Fusion Camera System technology for photo-realistic computer-generated characters through motion capture animation.

Though claiming reluctance to slam another filmmaker, Cameron bad-mouthed Lionsgate’s My Bloody Valentine 3-D because it was a step backwards to the old 1970s model of “3-D shock horror where they’re jabbing stuff in your face”.

Cameron said that, by contrast, he wants 3-D to be less noticeable so it doesn’t “take people out of the experience”. He stressed that Avatar is not going to hit audiences on the head with #-D even though almost every shot is green screen. But not 3-D constantly. He wants “one immersible experience” with 2-D and 3-D together and the audience so engrossed that they “won’t notice the difference” .

Finally, he gave Jeffrey Katzenberg huge props for being a “proselytizer” for 3-D with exhibitors. But Cameron was asked today if 3-D pioneers were sharing info. He replies yes, they would and should for the near future. But then he warned that eventually it will get “viciously competitive and cutthroat”.