If you like Photobooth on your Mac then you are probably going to like Motion FX.
This free app uses your iSight camera in your Mac to which you can add visual effects based on movement, faces, mouse movements or movement in general.
Autodesk® Motion FX lets you create stunning real-time video effects using your computer’s camera.
Simply select your favorite preset effect, and create an incredible visual experience by moving in front of your computer’s camera. A preset cycling mode lets you automatically cycle through effects without lifting a finger. You can also use the Face Tracking technology of OS X Lion to emit effects from any faces visible to your camera.
If you want more personalization, there are more options you can play with in Motion FX. Color Detection lets you select a color from the live camera feed from which to emit effects, and with Effect Paint you can play with fluids using your trackpad or mouse. Video Warp mode lets you distort live video using your mouse or trackpad.
There is a live video effect, but unlike Photobooth you can only capture snapshots.
Not sure if there are any actual useful uses for this app, but you (or your kids) may have some fun using it.