Is this possible? If not, how would you have a character carry an object and then release it from their hand?
The usual way to do this is by animating the influence of a CopyLocation constraint. The wiki has some information.
Aligorith coded a “child-of” constraint patch that lets you animate parenting relationships, but I think it had some problems. There is a link to a build and a discussion in this thread.
You can check Copy Location Constraint example here: http://wiki.blender.org/index.php/Blender_3D:_ActionBook/Armatures