// mDirection is the direction of the character
Vector3 boneDir = getBoneWorldOrientation(mEntity, mHips) * mDirection;
// This is the direction of the crosshair
 Vector3 dir = mCameraTrans->_getDerivedDirection();
Quaternion rot = boneDir.getRotationTo(dir);

// The code below has been taken from the sinbad character controller and adapted to pitch, instead of yaw
Real pitchToGoal = rot.getPitch().valueDegrees();
Real pitchAtSpeed = pitchToGoal / Ogre::Math::Abs(pitchToGoal) * timeSinceLastUpdate * 100.0f;
if (pitchToGoal < 0) pitchToGoal = std::min<Real>(0, std::max<Real>(pitchToGoal, pitchAtSpeed)); //yawToGoal = Math::Clamp<Real>(yawToGoal, yawAtSpeed, 0);
else if (pitchToGoal > 0) pitchToGoal = std::max<Real>(0, std::min<Real>(pitchToGoal, pitchAtSpeed)); //yawToGoal = Math::Clamp<Real>(yawToGoal, 0, yawAtSpeed);
 mHips->pitch(Degree(pitchToGoal));

Note to moderators: If you think the Math and Physics is more appropriate, please move it there.

Vector3 boneDir = getBoneWorldOrientation(mEntity, mHips) * Vector3::UNIT_Z; //mDirection;
Vector3 dir = mCameraTrans->_getDerivedDirection();

Vector3 zAdjustVec = dir;
zAdjustVec.normalise();

Quaternion targetWorldOrientation;

Vector3 xVec = Vector3::UNIT_Y.crossProduct(zAdjustVec);
xVec.normalise();

Vector3 yVec = zAdjustVec.crossProduct(xVec);
yVec.normalise();

targetWorldOrientation.FromAxes(xVec, yVec, zAdjustVec);

// mTransform is basically the SceneNode of the character, I'm multiplying the target orientation with it's inverse orientation to get it to parent/character-space.
mHips->_setDerivedOrientation(mTransform->_getDerivedOrientation().Inverse() * targetWorldOrientation);