Great video, much better than the first two you've posted on YouTube with the dubious soundtracks. (why don't you upload this new video on YouTube?)The demo on the Dell XT looks pretty nice and impressive.
Sadly the demo on the iPhone not. The input speed on the iPhone is rather slow, and for a demonstration I expect that the user, who used the iPhone to input the text is familiar with the FrogPad technology. And because this user is not able to type very fast, I have little hope for your current application. It seems to be much faster to enter text with the fingers on an QWERTY layout on the iPhone than with this SoftFrog. So either your demonstration typer isn't capable of typing on a FrogPad layout or it's just not possible with this version of the SoftFrog at the moment.
That's an serious issue you should address.
The demonstration on the Dell XT however looks promisingly. Data entry seems easy and quite fast, still not as fast as I would like. But maybe it's the typers fault, again, which should be fixed immediately then.
It also seems that your application isn't that great coded. The main program always loses the focus, the SoftFrog receives the focus, SoftFrog switches focus back and then sends the key code. Pretty poor implementation of an on-screen keyboard. Just take a look at the TIP or other on-screen-keyboards. The better coded ones do not have to steal the focus from the main window. You should try to do it the same way, else I don't expect that this version will be compatible with every text input controls/windows.
I also miss some tactile feedback. At least a typical keyboard key sound should appear (on and off switchable) when you enter something. And maybe a sound or other notification, like complete screen color change, which shows the user that he has his fingers in the right position.
Things which are needed if you want to touch type on a touch screen display.
I don't know how you want to make it 'downloadable'. Free, open source, do we have to pay for it?
Well, I don't have a multi-touch device yet, so I wouldn't use this software at all. But if I had a multi-touch capable device already, like the Dell XT then, I'm honest, wouldn't pay a penny for this software, sorry.
For free, as an public alpha tester, well then I think a lot of people will give this a try and help you to improve it, however I don't expect that some will pay something for this early version.
My opinion.
I hope you'll give us more informations about this interesting piece of software soon.