The internet has exploded with Pandamonium! Check it out:
The extremely cool opening dream segment:
'Kung Fu Panda' Exclusive Video: Opening Dream Sequence
According to my friend Ethan: Animated by James Baxter and of particular interest--one tool utilitized for animating was the puppet tool in After Effects! That's just pure and blinding awesomeness(couldn't pass that saying up!)
And then the equally cool ending credits:
The main characters were animated TRADITIONALLY by the talented guys at Dreamworks.