I had a 480p laser projector that was about the size of an ipod touch (including the battery) that could pretty much replicate what I see in that video. Note that the room is pretty much unlit except for the projector and TV. It's not meant to be used in a well-lit area.
That advantages of the laser projector I has was that it needed no focusing, it was always in focus, no matter how far away you held it from the wall. With the recent LED and laser diode advances, I could easily imagine an addon device in the $200-$300 range. the trick is to get an image of our room, it needs a camera as well as a projector, and you can't use the kinect, since it would have to be behind you.
I don't know I have one of the tiny laser projectors here I was using for HMD experiments and at one point I tried projecting on my 106inch screen in my light controlled media room. IME anything over about 60 inches was pretty dim even with a white screen, it might have been acceptable for what's in the video at maybe 80in diagonal, but I'm just guessing.
If everything needed to be in focus though it would have to be a laser projector.
The other side of this, is any peripheral has to work well in imperfect conditions, i.e. poor light control, dark colored projection surfaces.
It can certainly be done, but at what cost to an end user?