Feature brainstorming: Can it listen to the music the user is playing and figure out where in the piece the student is playing and scroll along as it's being played?
Heck, you can take this to the next level and make it a guitar hero game for real instruments. A lot of music teachers wouldn't have jobs anymore...
The new GarageBand does that via a MIDI input..
This HN thread from the founder of an automated guitar chord transcription service and the Chords! WinAmp plug--in (k0ban) hints at the state-of-the-art of real-time music detection. Summary: Even beat detection is still a work in progress.