I saw this video on TED about augmented reality app that run on your smart phone.
I find this fascinating because of the possibilities to enhance the capabilities of the cell phone. They demonstrate that you can aim your camera at a painting in a museum, and it can replace the painting with a video that can explain the painting's history. I think that this can make for a very fun scavenger hunt experience. They also show where you can layer video over a live background. I wonder if the video is created using a Green Screen. They call it Aurasma.
I know that Qualcomm does something in this space called Vuforia. This is something I want to investigate more.