Is the line between fact and fiction being systematically eliminated?

So I was changing channels tonight and I came across a film entitled "the Last Broadcast", which is very "The Blair Witch Project" but with an interesting twist. However when I first started watching it I was unsure of it was a documentary or not. It was the very accurate documentary style that reminded me of the Blair Witch Project. The daughter of one of my mother's employee's was terrified and convinced of the veracity of the Blair Witch, until I told her it was a fictionalized story.

Watching this faux documentary the same week as Bowling for Columbine made me realize how popular the documentary style has become for fictional story lines. It has been used by Woody Allen ( Husbands and Wives) and Christopher Guest. Former Python alumnus have used it in "The Rutles", but now it has become such a popular technique that it seems almost impossible to tell real documentary and false apart.

True documentary has incorporated more and more main stream film techniques. Errol Morris has incorporated beautiful cinematography into Mr Death. Most documentarists have edited down thousands of hours of footage into a dramatic arc. ( Moore has been accused of altering time lines to fit into that dramatic arc.) Documentarists have also altered the genre by imposing themselves into the story line ( Michael Moore and Nick Broomfield). The questions of course becomes as documentary incorporates more mainstream film techniques and mainstream film incorporates more documentary techiniques, how are we as the audience supposed to disintinguish the difference?

Or is it our job as the audience to question film makers and documentarists?

Is it our job to do what I did just now when I was intrigued by the Last Broadcast, to go online and research the film until I found out the truth?

hmmmmmmmmm?