It would be really cool if we could develop this to the point that it would work in humans and with a minimal amount of hardware. Imagine the possibilities, coupled with wearable computing: we could digitize SO much information, from landmarks to museums to captchas and more... all without an obnoxious camera.
The reason a small camera is obnoxious is not the hardware. I think people would raise much the same objections to being recorded without permission if it was a human eye plus brain scanner.
(I'm not making a statement about whether these objections are right or wrong, I'm just saying this technology will not change the debate)