Brian Nenninger created an open source project called image-playground that lets you code your own image filters on-the-fly, right on your Android. It takes the camera image, applies your code, and shows you the result live.
The code below shows my own pixelation + grayscale filter. Butters was kind enough to pose for a treat.
The app isn't in the Android market yet, but the open source project has an .apk you can download. http://code.google.com/p/image-playground/
