1. A virtual reality system comprising: a camera adapted to receive images of a physical environment and to produce a frame of the physical environment that contains pixels representing a plurality of colors; a predetermined target color; a means for processing the frame and rendering pixels of the target color of the frame to be transparent pixels; a means for generating a virtual image; a means for combining the virtual image with the frame of the physical environment to form a combined image whereby the virtual image is visible at all positions of the transparent pixels; and, a means for displaying the combined image.