Make your own sensor using the IR emitter/detector:

There is an infrared emitter and detector included in the lab kit - use them to make a simple custom sensor for a hypothetical project (imagine a configuration that would be useful for a kinetic sculpture or other interactive setup)... you can hook them up in a circuit that looks like this:


The detector is actually a phototransistor. Like diodes, all transistors are light-sensitive. Phototransistors are designed specifically to take advantage of this fact by exposing the base region. So, light striking the base replaces what would ordinarily be a bias voltage applied to the base leg of a regular transistor.

This is the emitter datasheet:
http://www.sparkfun.com/datasheets/Components/LTE-302.pdf
And this is the detector (it's the one with the red paint on top):
http://www.sparkfun.com/datasheets/Components/LTR-301.pdf

Optical sensors can be used either intrinsically (where the optical path is not interrupted but modified internally), or extrinsically where the intensity of light is modulated by moving an obstruction into the light path. The data gloves made for VR simulations are good examples of instrinsic optical sensing, as the modulation of light through (lossy) fiber-optic cable is used to determine finger flexion. Old (non-optical) mice are examples of extrinsic optical interfaces, as the IR light is interrupted in a quadrature scheme in order to determine motion and direction - see how a mouse works for more info.

Optical sensors have been used in many installations, one example is Christopher Janney's Soundstair (1977), an instrument that transforms an existing stairway into a musical staircase (each step becomes a musical note). With various mechanical configurations, they can sense range, tilt, rotation, presence, water level, etc. and trigger or control many things. Be creative, and demonstrate integrating and applying optical sensing to make a meaningful and well understood measurement.