This recently posted video for Sony Playstation Move highlights the power of projection mapping, combined with a dynamic projection environment. By moving the surfaces onto which light is projected, a completely new, flexible environment was created.
In this video, it seems like the actual projection was rendered beforehand, and projected from a normal projector. The performers had to synchronize their movements to match what was going to be projected. However, think of the possibilities of combining this type of projection mapping creativity with the real time environment and surface modeling of a system like the Microsoft Kinect, to create a live generated, projection mapped environment that responds to changes in the physical projection surfaces.. the possibilities are just starting to be realized.