Do you think it's possible to make Pranav Mistry's Sixth Sense Tech device out of an Arduino and components?
more then possible to make something along the same lines, but when it comes to Wearable Computing you should look into the LilyPad Arduino
and take a look at the book Fashioning Technology
Hmm I would say that at least something similar is possible. You would probably need the atmega 1280 (as on the arduino mega) or better though.
Interpreting video like that does would not be easy but you could have a look at other guesture based interfaces. In theory you could also contro a projector (pico or otherwise) as the arduino has controlled video before.
Mowcius