I gave a talk at OOPSLA in Montreal in 2007, made a pacman game during my 30 minute talk slot using a live programming language/environment. I'm sure I wasn't even the first, as I got many of my ideas from Chris Hancock's PhD thesis published in 2003, "Real time programming and big ideas in computational literacy", and of course the multitudes of less but still interactive Lisp and smaltalk environments, and fully interactive visual environments way before that (starting with sutherland's sketchpad).

I'd like to see tests running as I type. Something like this: http://www.nileshtrivedi.com/livecoding_js_demo/