Yaaaaay! Works!
right now the simplest way to test was screen capture, captured a 200x200 region and scaled it to 8x8, with the diffuser it makes for quite classy entertainment 
the colors are quite good thanks to the built in white balance setting in the colorduino. i had to set all colors to a pretty low level, which dims the image to a point where it becomes more similar to a computer screen and still allows for 253 brightness values, score!
transfer rate is about 15 fps due to the heavy screenshooting on the pc. the usual 22fps i get out of it should be enough for a wide range of applications.
cheers!