If you know any good starting point to learn how to create such effect using Adobe Flash for an iPhone app, or even an Air app, it'd be of much help.
Specifically, I want it not to save the overlay only show it while the user is taking the image from the camera.
Here is a great link to the camera class that should get you started. http://help.adobe.com/en_US/as3/dev/WSfffb011ac560372f3fa68e8912e3ab6b8cb-8000.html
You can then add most any objects on top of the video/camera object for the transparent look you are going for.