The Word Lens application is amazing, one of the best uses of augmented reality yet! You just point it at a sign (or any text) and it removes the words that are there and superimposes the translation over the old text.
The program is free and if you want to test it out, it’s two translation modes: “erase the text” and “reverse the letters”, while not very useful, make a great demonstration. The Spanish-to-English dictionary is $9.99 (they also have English-to-Spanish for an additional $9.99).
It’s not the best video, but I really wanted to demonstrate this in a real world example. And since in the middle of recording the video I realized it was time for my bus, it’s pretty real world…
You’ll want to make the video full screen to actually be able to read it (and maybe you’ll need to pause it to really see what’s going on).
As I said you’ll want to look at it full screen (in HD) or you won’t be able to see the action on the iPHone screeen, so be sure not to just watch the embedded version.
I forgot to mention, no internet connection is required to use it! Once you purchase a dictionary it’s on your device (I assume it runs on the iPod touch with the camera also), it’s actually got a “dictionary” where you can look up words.