Hey Brett,
Have you seen the video that goes into detail about those cameras? It's all done in hardware -- the result being the video image looks natural.
It's from the Shuttle tribute video. I'm pretty sure I posted it here a while ago.
http://www.youtube.com/watch?v=W2VygftZSCs
It's 45 minutes long, but, pretty mind blowing.
I still think that the image you posted doesn't look natural. Ugly halos and so on.
Of course, these guys aren't doing HDR for "fun". They're using this exposure blending methodology to try and see what happens within the plume at lift off.
H