We use a tool that tracks individual users' mouse movements and clicks on our site. Right now it only tracks anonymous visitors, but we're thinking of using it to track specific logged in users' data. We'd be using it for analytics, but we'd like to have the data in case we need to analyze how a particular person uses the site.
Are people, in general, alright with this? Does this constitute privacy infringement?
The short answer is it is your site, for the most part (for now) you can track whatever you want on it.
However, some things to consider...
a) 3rd party analytics tools have their own privacy policies and Terms of Services that may or may not allow this, so if you are using something like Google Analytics, Omniture SiteCatalyst, WebTrends, Yahoo Web Analytics, etc.. then you need to read over their Privacy Policy and Terms of Service to make sure you are allowed to track this sort of thing. Offhand I don't think any of the ones I mentioned disallow tracking mouse movements/clicks specifically (and in fact, some of them have features/plugins for it, called "clickmap" tracking, or similar), but some do have restrictions on other data you may couple with this. For example, I know Google does not allow you to associate any data with the user's IP address. You cannot send it to GA in a custom variable, nor can you store it on your own server in any way that you can associate it with data you send to GA (for example, storing the user's IP in your own database along with a unique id, and then sending the unique id to GA, where you can then lookup IP by that unique id).
b) Privacy is indeed a concern that is currently being discussed by the powers-that-be, and your ability to track certain things may indeed be limited in the future. For now, it's mostly about personally identifiable information, and it's mostly happening in Europe, and tracking mouse movement/clicks generally isn't personally identifiable, but who knows what the future may bring.
c) Make sure you understand the costs involved in tracking mouse movements/clicks. In order to track something, a request has to be made, data sent somewhere. The more granular the data, the more requests and/or data needs to be sent. Whether it is your own baked up tracking solution on your own server or a 3rd party, this will cost something one way or the other. Imagine sending a request to a server for every x,y position of the mouse as it moves...this could quickly add up, and a lot of 3rd party solutions place a limit on how many requests can be made per visit(or) or day on an account.
d) On that note, if you are using a 3rd party solution, tracking something this granular may affect tracking more important stuff. As mentioned in "c", many 3rd party solutions limit how many requests can be made per visit(or) or day on your account, etc.. and if you hit the limit, any requests after that won't be tracked. Imagine if you have tracking on a sale confirmation page, tracking details about a sale made, which is very important tracking, being tossed out because of too many requests of mouse movements on some random page...
e) On that note... consider how actionable tracking mouse movements and clicks really is to you. This is a question you have to really ask yourself whenever you want to track something: "How actionable is this?" Basically, imagine yourself having the tracking in place and looking at the data...then what? What will you do with that data? Assuming the ultimate goal is to make more money, increase conversions on your site, etc.. do you really think knowing the paths a mouse cursor took on a given webpage will help you increase sales/conversions? How will you be able to know if the mouse movements are related to content on your page, or if they were just some random jerks/movements while reading content or making room on a desk, etc..? At best, the data will be polluted...
Clicks on links or specific action buttons on a page? Sure, those are certainly worth tracking. And most 3rd party solutions automatically track a lot of that stuff, or offer custom coding solutions for manual wiring up of things. And there are plenty of reports that can be made showing activity from them.