Nintendo, if given that idea, would love it. They have an upcoming game called Mario Maker that lets you create Super Mario Bros levels, on the Wii U. And the 3DS has a camera.
That's a great idea. If I could get the image processing to run fast enough, I'd love to get to a point where you could have Screentendo overlay a video (of a scrolling level for example), and have the level blocks generate as the video played.
My Sony phone has augmented reality toys that kind of do this. Point your phone at a table top, and dinosaurs appear which are able to navigate objects on the table and trees grow out of things.
