I have already watch the video clip (see above) and downloaded the app itself onto my Nexus One. Tomorrow I will try it out at school with the kids to see how it goes.
It remains to be seen what exactly can be done with this additional Scratch input, of course. Would it make your phone into a game controller or scientific probe? Would it give you robotics, remote control-style interactions with Scratch?
I will post again on this topic when I have had the opportunity to explore this one further.