At the moment the only existing services even remotely like this are Pleco, a Chinese learning app and a feature on Google Goggles where you can snap a stillshot and send that in for translation. Word Lens is currently self-funded.
It's a little bit like Pleco, but without the whole language learning stuff. We just gave it a spin, and while it's not quite as accurate as this video claims, it's still breathtaking to behold -- especially as it doesn't require an internet connection to do any lookup. Sadly, it only translates to and from English and Spanish for now.