1. An interactive image projecting system, comprising: at least one physical object; and a handheld projecting device including: an outer housing; a control unit within the outer housing; an image projector operatively coupled to the control unit and operable to project a visible image comprised of one or more video objects generated by the control unit; an image sensor operatively coupled to the control unit and operable to observe a spatial view of the at least one physical object located on a remote surface; and an object tracker operable to analyze the observed spatial view of the at least one physical object and determine a position and orientation of the at least one physical object, wherein the control unit modifies the visible image comprised of one or more video objects based upon the position and orientation of the at least one physical object such that the one or more video objects appear to adapt to the position and orientation of the at least one physical object.