I think it would be more fun if it is augmented reality. Use camera to capture the photo and automatically make the difference by replacing the color. Would be even cooler to use zoom and move your camera as magnifying glass.
Nice idea, it would be interesting trying to come up with an effective algorythm for automatically making the difference changes to an image captured by the phone. I like the concept though.
I did try a version where the Magnifying Glass magnified stuff under the cursor - it isn't difficult to do and I was in two minds as to whether to keep it or not. (I might add it as an option via a querystring parameter if I get the chance this week?)