I'm not sure about the IR LED solution, it doesn't seem that reliable. Here is one example of that method
(thanks Adam)
I am trying to find something off the shelf.
Tom Igoe has some information
http://www.tigoe.net/pcomp/resources/archives/elec_supplies/000678.shtml
Linking to OEM products from Polar
http://www.polarusa.com/manufacturers/products/products.asp
and Masimo
http://www.masimo.com/OEM/index.htm
(im still researching)