I like the idea, although I don’t have a webcam on this computer so can’t try it out. I guess it works a bit like some of the playstation eye-toy games.
Quite a few years back (on a BBC B - showing my age now), I made a 1-D magic wand using a spare panel meter element, a gyrator circuit to create a negative resistance equal to the internal resistance of the meter (so the meter movement became undamped). The meter should have the needle rest position at the centre, which limits the choice of meter movements that can be used. Angular acceleration induced a voltage which was amplified & A/D converted. This resulted in a cheap angular accelerometer. Using 2 meters+circuits, it is possible to make 2-D wand, although I didn’t get round to that. I’m not sure whether off axis angular acceleration would cause additional friction in the meter movement, which might be a problem.
Integrating this up twice gave angular position. However drift error was a significant problem, so a fair amount of wash-out had to be applied. This resulted in a slow induced position drift towards zero over several seconds. Thus waggling the wand gave a temporary position displacement.
Using this technique it is possible to make games similar to the one where you bash the moles (name escapes me at the moment), since a fast temporary position displacement suits that kind of game.
These days you can buy minature electro-mechanical rate gyros for model helicopters, although they have a limited life as they usually have plain bearings. So even more possibilities, although the vibration & odd feel doesn’t really lend itself to hand controllers. There are also solid state gyros (as used in the Segway people transporter, but these are probably expensive).</rambling on mode>
Alan