It's called blind deconvolution. Blind means that they have to first estimate the original convolution/blur kernel and in the second phase, apply the deconvolution. If there's acceleration sensor on the camera, you can use data from that for the blur kernel. It's nothing new really, but algorithms for it have advanced tremendously. For example, there's some results from 2009 http://www.youtube.com/watch?v=uqMW3OleLM4…
Does this algorithm lend itself to video? Probably would take a massive cloud of systems to correct any highdef video signal, but it would be impressive for many applications (news broadcast, sports, or any live event, security, or remote robots) Granted to achieve performance on the order of near realtime dsp, it would require an impressive hardware system. Then again, when I can spend the price of a coffee and get…
In theory, you can tweak this method such that it is run in parallel frames 'almost' independently. I say 'almost' since you will have to factor in temporal coherence, such that deconvolution kernels do not vary much between subsequent frames (otherwise it will cause unwarranted flicker and jitter like effects)
However, more pertinent and related problem with respect to video is that of image stabilization. And computer vision community is making some exciting strides in the front; for eg: http://web.cecs.pdx.edu/~fliu/ .