The Metaverse lab at the University of Kentucky has been doing this kind of stuff for a while... all kinds of cool stuff involving projector arrays, perspective correction, etc.

http://www.metaverselab.org/research/immersive-env ironments/vrc2003.pdf

Oh yeah, and you don't need rear-projection to avoid casting shadows. The Metaverse people are using active shadow cancellation... see slide 34 in the above PDF for an example...

I'd be careful. If this program becomes popular, your name might be the first one to come up when someone searches for "molester" and if people use the app to trade kiddie porn you are in even more trouble :p