A not-so-successful prototype:
Our very first class at SVA Interaction Design was 'An Introduction to Cybernetics' with Paul Pangaro. Since then, the role of feedback loops has consistently be a consideration in much of our work on the program. In my early efforts to gracefully link the analog world with the digital, I've frequently thought about how an input device could not only send a user's intent to the screen, but somehow embody or react to what is happening on the screen.
I think only in achieving this will there really be a seamless experience, but it's one of the hardest problems to solve – the digital world is of course capable of all kinds of 'magic' and dynamism that the physical isn't. The 'dancing bits' that Hiroshi Ishii talks about.
Some of my early attempts with a potentiometer could be overcome with a motorized fader, borrowing a technology from the music world. A motorized fader both allows a user to set a value (like a potentiometer) but also automatically jump to a value via the motor. You could imagine setting a color value, then selecting another object and having the fader jump to that value in case you wished to adjust that one.
Unfortunately this fader is far less responsive and dynamic than I'd like. I wired it up following a diagram, and used some sample code. This is still an avenue of interest but it will have to wait...