Yeah you can totally do that.
Take a look at this screen shot.
Create a cube
Parent your Camera to the cube
Add an FSM to a cube
Create 2 float variables called "HorizontalAxis" and "VerticalAxis"
Use 2 "Get Axis" actions and label the axis names "Horizontal" and "Vertical" (same names as the player input button names)
Increase their multipliers to 2 to make him move faster
Add a translate action and use the "VerticalAxis" variable as the "Z" value
Add a rotate action and use the "HorizontalAxis" variable as the "Y" value
Make sure "Every frame" is checked for both of them.
Voila!
Your cube moves around exactly like your demostration webplayer you posted.
In order to blend the animations, I'd create a second fsm on you cube.
Make the 2 VerticalAxis/Horizontal Axis variable global variables by putting them in the Global Variable section instead
Then on your few FSM, you would use a float compare to check if those variables are equal to 0 or a positive or negative number.
eg: If Vertical Axis is zero then goto a state where you play the idle animation
If Vertical Axis is Greater than 0, goto a state where you play the walking forward animation
If Horizontal is greater than 0 - goto a state where you play the turn right animation
etc etc etc
Try it out and let us know if its the way you were thinking