I have this idea for a black and white photograph to be scrolled across in front of a sensor which reads the shade of black/white at any point in time and send this data to arduino.
a) what kind of sensor do I need?
b) can this sensor read 'shades' or can it only tell if it's black or white?
A QTI Sensor can tells shades of gray if you hook it up to an analog pin. Of you could overkill it and get a Linescan Imaging Sensor that pretty much takes a picture of your picture and saves it. Or, you could buy a light to frequency IC (TSL230R) and get your math on.
...or you could just scan it. You've got some options here.