create a device, which when swung around, will detect the frequency with which it is being rotated / swung.
and displays letters in mid air, using leds which are turned on/off at the right frequency.

plan is to have a light sensor in the tip, which is sampled 10 times/second, have the device do a FFT, 
to determine the rotational frequency. ( assuming it won't be rotating faster than 5 times/sec. )

and depending on that determine what the dot frequency for the letters should be.