I have to say I after the experiments I have been conducting I am in a little bit different place than I thought I would be at this point. However, that isn't a bad thing.
Initially I was asking questions about how projected type could be interactive, either with the user or with the surface it was being projected upon. Due to the lack of a projector I could take around and use for my experiments I began using a flashlight and letters cut out of cardboard and such. I discovered some interesting things there which didn't quite answer the initial question exactly, but led me down a slightly different path.
I began using transparencies and shinning the flashlight through them. I'm not sure if it's the flashlight or what, but the results are very interesting. This has led me to an idea I have that would merge what I have discovered through my experiments, and user interactivity.
My drawing is crude. I apologize.
It will consist of a tube constructed from bristol board and foam core which I would shine the flashlight through. The squares would be cut out sections where the user could place provided type. Each square would consist of a different letter, and there could possibly be more than one typeface used. The user could then create their own message. The user could also control the distance, and the angle of the light which changes the appearance of the type.
I would include more images, but I need to work on capturing them better first. So far the ways I have attempted, haven't reproduced the results I desire.