A neat little app has just popped up on iTunes for the iOS systems that combines text recognition, image processing, and language translation into a smooth augmented reality system.  ‘Word Lens‘ processes video from your iPhone or iPod Touch in real-time and removed text, and replaces it with replacement text of a selected type.

Instantly translate printed words from one language to another with your built-in video camera, in real time! Use Word Lens on vacation, business travel, and just for fun.

The free demo mode just replaces with nothing or backwards text, but you can buy $5 packs (in-app) for English and Spanish translation.  A great little idea, and probably one of the few apps I’ve seen that I would really call Augmented Reality.

See above a screenshot of the free demo pointed at my GTC Coffee Mug.  Of course it has trouble with the ‘GPU’ part on the left (probably because GPU isn’t a word), but it recognized and reversed ‘Technology Conference’ with surprising accuracy.

via Word Lens for iPhone 3GS, iPhone 4, and iPod touch (4th generation) on the iTunes App Store.