Of course, the above technique is pretty limited.
in version 1.8 we introduced "Effect backdrops"
The goal we have for the next iteration of backdrops is to allow you to hook any 3D backdrop to an animation.
Basically you'd drop a new 3D model backdrop, make it point to your FBX with one or more animation paths, then drop some other 3D backdrop as a child, and in the child backdrop you'll see a list of "sockets" that map to the parent backdrop's anim tracks (could be a character's bone, or just an animation path)
this will allow you bring in an animated character and preview how your torchfire effect will look in its hand when it moves around, or setup a racing tesbed, with a car model travelling along a looping path, hook a camera backdrop to the car, so that the viewport cam follows the car, hook an effect backdrop to a wheel, and see how your effect behaves when travelling at actual ingame speeds, etc..
We'd like to have this done for v1.9.
but anyway, in 1.8 you can still get some of that with the simple editor path feature :)