I've been working on a slightly more ambitious (but still a ways off!) similar project, see http://jonathanclark.com. Initially I tried using a wiimote, but found it has a extremely limited coverage area and accuracy. If you move a few feet out of a sweet spot it will stop working, also the wiimote has a lot of noise in it's samples so you end up having to smooth the samples - but this introduces a lot of latency which destroys the illusion. On the low-cost end, the TrackIR system works a lot better (faster, more accurate samples). I have a demo using TrackIR posted here:

http://www.youtube.com/watch?v=tzKTJM5T0us&feature=player_embedded

TrackIR also has a limited area it can work with, so now I've moved to using OptiTrack which gets pricer but can cover fairly large areas (at least a small room).
One other issue I found is that flat video doesn't look entirely convincing because motion parallax should occur within a frame - for example, when you move left to right, the bridge and the water behind it should move at different speeds. To help address this, I'm currently trying to create a depth-map per video frame and convert that depth map into a mesh which the video is mapped onto. To start, I'm drawing the depth map by hand (should be ok if objects don't move much), but I'd like to create it automatically by filming from multiple angles and using feature point extraction to estimate the depth for every frame automatically.

Yes - it's true.

I flew from Munich to San Francisco last Tuesday and our plane offered Internet Service (lufthansa). They charge $8 for 30 minutes, and $30 for unlimited. You have to use the initial 30 minutes all at once, you can't break it up. I used it for about 40 minutes for a cost of ~$15. A bit pricy, but who else is going to offer service up there? I was able to close a deal and process an order that I might not have otherwise so it paid for itself.

The transfer rates and ping times were comparable somewhere between low-end DSL and a modem - plenty gast for surfing, email, and downloads - but not for gaming. It uses a wireless router on the plane to talk to laptops. I had 3 thoughts on this. #1 the network traffic is unencrypted unless you use SSL or VPN, so planes would make a good place for network sniffing. #2 The authorization system only allows access to boeing's site before you pay - but it allows DNS to go through, so you could write a driver that communicates with the outside world through DNS queries and get free service. #3 It would be hard to stop passengers from getting together and share internet connections wirelessly. Don't know if any of this would happen, but watch out if the prices go to high. Oh you can also access Lufthansa and MSN search before you pay, so it give you a chance to see what it's like.

The service is run by Boeing - they showed a video of a directional antenna that tracks a satellite.

I thought it was pretty cool overall, but I regret that I no longer have a place I can "get away from it all".