Kinect has been hacked, allowing DIY modders to play around with it and use it for their own devices. One of the first projects to appear since it was hacked is this, an amazing update to old-school shadow puppets.
This animated bird is the project of Emily Gobeille and Theo Watson, and they use the Kinect sensor to control it with the movements of your arm and hand. And this is mere days after they figured out how to use this thing! Clearly, we're just seeing the tip of the iceberg when it comes to the Kinect's potential outside the world of video games.