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It is worth noting that Johnny Chung Lee, the CMU wiz of Wii headtracking/YouTube fame, works for MS on Project Natal now.

http://procrastineering.blogspot.com/2009/06/project-natal.html

Again, I want to see this in a real application and not one of MS's 'vision' videos. That said, if Johnny Chung Lee is impressed by MS's tech, than I am impressed too. He breaks down a bit more about *how* it works and identifies people in the "cloud" on his blog.