Mouse tracking in screencasts

In the past I’ve created a bunch of different screencasts, and one thing that’s always apparent is the difficulty in distinguishing the inputs from the mouse. Tools like istanbul and recordmydesktop provide a good way of capturing video, however they’re not so good at creating training videos. This has gotten me to thinking, and in one case I started looking at a mouse tracking tool in ubuntu which recorded mouse input and played it back, although it played it back on a white background, so non too useful. The upshot is I have an idea for what could probably be achieved quite easily.
Mouse event tracking, green dot depicts a click (blue could depict a right click) and red depicts the current location
Firstly, not too many changes would be required to istanbul, it would probably only require another checkbox in the notification area icon for “Record mouse events”, then the event recording too could be spawned to perform the recording, or the code could be folded into istanbul. Either way non too difficult. Once recording is complete, the recorded events are then played back into a cairo renderer, generating a transparent PNG of events in time with the video. The PNGs and video are then composited together to create the final output video. Various options are to be had, for instance only displaying the last x number of clicks, or y distance travelled, or event points decaying over time. With the mouse leaving a fading trail of where it once was.
With this kind of simple and non-intrusive method of gathering richer screen casts, videos can easily be applied to training scenarios where classrooms watch a demonstration of an application.It would also be nice to have this kind of overlay on the desktop as it’s being used too, so live demonstrations can be done too. Doing it live is a different animal to doing it in a recording, as you need a composited full screen window which can be drawn to while at the same time passing events through to the applications beneath.
I believe that in the future, screen casts of applications should be included in the help documentation, with internationalised narration and/or subtitles. Richer documentation could really start to draw the crowds to the GNOME desktop, especially of particularly complicated things to use like evolution.
Anyway, I intended this post to start a discussion regarding the merits of such an idea. Random speculation of examples of application and the upshot welcome, as are technical considerations and possible routes to achieving the goal. I’m especially interested to hear from the istanbul developers, and the developers of whatever mouse tracking application I tested unfortunately the name escapes me :/