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Blaire Witch was not extraterrestrial or done by spirits, but by powerful spirits incarnated in humans who wished to be left alone, which they arranged by quite human means. Similar to VooDoo, where the suggestible did themselves in.
Note: below added during the Aug 31, 2002 Live ZeatTalk IRC Session.
How would it be, that a scenario such as the Blair Witch would make it to the theater, without a basis in fact behind it? Dinosaurs are interesting to the public, because of bones. Ghosts, and hauntings, kidnappings and stalkings, bank robberies and secret love affairs - all because they have a basis in fact. Blair Witch would be without interest, unless real, which it is, regardless of what the producers decide to Announce. Of course, they did not publish the filming of an actual event. Of course, they staged the filming. But did they get the idea, and think it captivating, because it was a real situation? Yes. As this is he-said/she-said, we doubt the issue to be settled just because we-said.