"Now watch this," says Syd Dutton of Illusion Arts.

The reel cranks and this time Eddie Murphy careens across an empty highway. The lack of cars reduces the drama considerably. Nothing whips in front of him, but he launches himself up on the tips of his toes, his arms flailing through the air. Please grin your own I'm-an-absolute-idiot grin. You've been had.

"The cars are all 2D and 3D models," says Dutton. The verité, he might add, is really the work of the compositors, who used Adobe After Effects to choreograph the cars with Murphy's goofs.

Ensconced in their Los Angeles warehouse, Dutton and partner Bill Taylor sit framed against a massive matte-painting easel. With graying hair and prematurely grandfatherly manners, they've been at this twenty-five years, and today, they give as much a history lesson as a tour of the future.

From a shelf, they pull down old oil matte paintings, those strange, impressionistic canvasses that somehow look realistic when shot through a lens. Out back, a just finished plastic boat - yes, they still use models- gives off an odor of airplane glue. Even so, in another corner of the studio, shrouded by heavy black curtains, their young turks carry on the battle with Photoshop, Maya 2.5 (from Alias Wavefront), and After Effects.

It's Taylor, the cinematographer, who is the more reflective of the two. He and Dutton met while working for the legendary matte-painter Al Whitlock at Universal, back when studios had their own special-effects houses. When their department died, they bought its equipment and used it to form Illusion Arts. One hundred and fifty films later, they've seen the whole special-effects world upended several times, finally righting itself in a pantheon of Photoshop gods, AfterEffects wizards, and Silicon Graphics 3D gurus. Their signature work, like the Academy Award-nominated pullback from Captain Picard's eye in Star Trek First Contact and the five-mile shot that opens The Birdcage, is familiar to everyone.

A visit to their studio is enough to make anyone question reality. In one reel, a plane sweeps around in a majestic storm. "That's not a realistic cloudbank, but it gives it a mythical feel," Dutton says with the assurance of a guy who knows a good cloud from an obvious counterfeit. At another point, Taylor points out a wave cresting against a World War II-era destroyer, "That's just an interference pattern," he says. "If you do it right, it looks like a wave."

Their studio, employing about 20 people, is one of the smaller ones to do such kinds of work. They get by on a healthy diet of about twenty shots at any one time, divided mainly between feature films and commercials.

The only downside, of course, is that special effects is a constantly evolving field, and constantly evolving fields wreak havoc on businesses. "Years ago," says Taylor, "a special effects man like Ray Harryhausen would do all the effects for a movie by himself. Then came Star Wars and you needed an army just to do one film. Now, with the digital revolution, it's getting back to the point where one good artist in his garage with a desktop computer can do a beautiful shot. It's come full circle."

Where that circle leaves a mid-size firm is a question that the next few years will answer. In the end, it will probably down to art and experience, and there, Illusion Arts may have an edge. "Don't forget the old tricks just because you have a lovely bag of new tricks," says Taylor. And these guys have a lot of old tricks left in the bag.

Adobe senior editor Joe Shepter is easily fooled by special effects.