I don't know if I'd say it's a non-starter, and I don't think it's fair to judge Leica's offerings the same way that one would judge some other well-funded, well engineered offerings. Leica is afterall a small lens company that occasionally throws a few dollars into camera development...I recently read that their entire development budget for the average year is less than $4 mill. Add to that bad management and a general lack of understanding for how the market moves, well, you've got some lovely cameras, but worldshakers they are not.
I think the main problem is that there is a general lack of the needed technology yet on the market....in a couple of years even, such a thing may be eminently feasable.
The secondary problem is not one of demand per se, because as we all know, there are a lot of people who are not even as fanatical as we are here at RFF about their long assembled gear. Imagine all the guys and gals out there with their battle-scarred OM-2's, K1000's and AE-1's, that will not sell them, not matter what, even though all they do is collect dust.
The problem is rather that The New always beckons, and thanks to advertising and a general perception that film somehow has ceased to exist (a few weeks ago I ran into a friend with my camera in hand, and he asked me where I get my film these days, since it is no longer made...that was news to me); people always want the newest and the coolest, even if that means throwing the trusty old SLR into the attic.
If somebody really creative could assemble some venture capital to not only develop, but also market the hell out of such a device, I think it could work....unfortunately, there seem to be some fields that venture capitalists are willing to wet their feet in, and some that they are not. We can hope for such a product, but I think it's unlikely to happen, as Bill said, because when the technology exists, the demand will not be there; everybody will already have a DSLR or some such.
As a couple people have said already, the whole package wouldn't HAVE to fit into the camera, although that would be a much more effective marketing strategy. With blue-tooth, or some of the new promised wireless technologies, all the guts except for the sensor and a battery to power that sensor could be in a little cell-phone sized apparatus that one would stick in their pocket, complete with an LCD and a banana to chimp with.
