We all know about photoshopping and the way it has made photographic "evidence" the least rather than the most believable indicator of underlying reality.
For the next step down this road, consider this project from Kevin Karsch, a PhD student at the University of Illinois / Urbana-Champaign. Its official title is "Rendering Synthetic Objects into Legacy Photographs." Once you realize that "legacy photographs" means "real photographs of something that actually existed," and "synthetic objects" covers just about anything you can imagine, you have an idea of the potential. But check it out (and be sure to listen to the narration):
For more discussion, see Slashdot and Vimeo. Karsch says that the system, designed to be very easy for non-techies to use, "has applications in the movie and gaming industry, as well as home decorating and user content creation, among others." Among others, indeed! I can think of: political advertising and "reality"-creation, blackmail, the ever-evolving "news" media, and the law. That old chestnut about "who do you believe, me or your own eyes" will take on a new twist. Thanks to E. Goldstick.
Update: Jamais Cascio went into some of the possibilities of this alterable video "reality," and its political and cultural ramifications, three years ago.
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