Perhaps, i was thinking something like this also.

If you are moving, then the GPS can use vector information to know which direction you are facing. This added to the accelerometer may give decent position data. Its not going to be perfect, but...

I was confused when you said 3d Space. It does not have gyros or stuff like that. However, I am sure you could pair a Wii Motion+ or PS3 controller with it, or a custom Bluetooth Adurino gizmo. Maybe a Serial ( via Bluetooth) Compass would work also.

If there is USB Host support, other possibilities arise. DON'T ASK ABOUT USB HOST HERE. THERE IS A SEPARATE (POINTLESS FOR NOW) THREAD.

If you want to make an AR app, I think image processing is WAY cooler. Like that Tegra zombie game was awesome.