Hey, so i've sufficiently filled in the feature set enough that I feel comfortable posting the results of the new round of prototyping I've done around my hardware interface that you can use as a controller for programmatic visuals or as a step sequencer for music.
Here's the latest demo video: http://www.youtube.com/watch?v=5k6Evcq3zuM
The basic premise is that it reads all the buttons and sliders and whatnot, then outputs a serial data stream which is picked up by a processing app, which in turn translates those into OSC messages. From there you can control whatever you like, processing, quartz composer, etc. However, we're bundling a companion app that my collaborating partner has built in Max/msp called "steppa" that creates a MIDI loop for music. This lets you plug into any modern music app: Logic, Live, Reason, GarageBand, and presumably others.
here's a peek at "under the hood" at an earlier stage... whoopsie... bugs on the PCB ::) : http://www.flickr.com/photos/stevecooley/3854864841/in/set-72157621882557089/
and Hello, beautiful... the arduino mega: http://www.flickr.com/photos/stevecooley/3843447970/in/set-72157621882557089/
So, I'll go ahead and claim that this is an arduino mega shield. :) I'm using eeeeevery pin.