Dan Wilcox rigged up Kinect to see a human body and estimate approximately where the chest area would be on that body ... and then display either a bra or pasties over that area. Of course it's called "Titty Tracker." And Robert "Flight404" Hodgin created a program that generates a 3D model of the person in view of the Kinect, and then distorts that model to create some kind of puffy monster. The point isn't to create nightmare fuel, it's just proof of the open-source Cinder software's ability to access Kinect data.
Other hacks can be found in this roundup, including one that renders people entirely in horizontal white lines, one that uses movement with a MIDI controller to turn the Kinect into a sort of theremin and a head-tracking program.