The first and only time I heard about this was back in the mid 90's on Nickelodeon on a show called U to U (which is probably equally as obscure). Remembered the concept and a line of dialogue and that was it.

Hadn't found any info on it until today somehow, but it was a 20-30 minute movie where you can vote on various actions that the protagonist takes in a theater. I thought it was some obscure thing, but apparenltly it was bad enough that it was Ebert's worst movie of 1995.
According to Siskel, for $5, you can watch it twice, to vote on different outcomes. He said he'd rather pay $10 to watch it only once.

I can provide Siskel and Ebert's views on the matter if needed but here are some clips:

<iframe width="420" height="315" src="http://www.youtube.com/embed/0tp8av0SesI" frameborder="0" allowfullscreen></iframe>

Was just thinking about this- it was on a laserdisc, and the theater seats had buttons where the audience could vote on the outcome. Would be nice to find the disc now.

One of the first DVDs released was an interactive movie called "Tender Loving Care" but I never picked that up when it was out. I do have a porno called "Search for the Golden Panties" where at several points you can decide what the main character's going to do- typical outcomes are scoring with the girl in the scene if you pick the right answer, or having her throw the guy out and thus ending the movie. "Return to House on Haunted Hill" on HD-DVD was also like this, though as of yet I haven't had time to check out much of it.