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This is the story of how augmented reality met optical character recognition and how the two fell in love. They then had a baby and called it Word Lens, which grew up to be an instant translation app.
To try the system for yourself, you'll need an iPhone 3GS/4 or the latest iPod touch, the app (you can grab it from Apple's App Store), as well as a $5 language pack. If you can't obtain those three, you'll have to live with being awed by the video embedded below, put together by the app's creator, Quest Visual.


The video is tweaked a little to make the app look better than it actually is, but it's still rather impressive, especially since it doesn't require an Internet connection to work. While the translation isn't perfect, it's certainly good enough to get the basic meaning across.
For now, Word Lens only translates to and from English and Spanish. Still, the video speaks for itself. The app will undoubtedly grow in popularity very quickly and expand to support more languages. Hopefully we'll see it come to more platforms as well.