Interesting idea. Do you know any cheap lenses that could be used for this purpose? I found this DIY macro lens for cell phone cameras using a DVD player lens. Looking at the pictures from that site, it seems that this macro allows only for very, very close-up shots, so it might in fact be too close. For image processing you would need to capture the entire image of the ball, which letters you can see (N,S,E,W), and from there determine the ball orientation. If you can only see a tiny super-close-up portion of the ball, it would be harder to determine the compass orientation.

Also, I tried placing the small ball compass next to my current cell phone and noticed there are some magnetic "hot spots" where the compass won't work due to magnetic interference. So, depending on the magnetic fields around the user-facing camera, the position of the ball compass may need to be adjusted. A mirror allows more flexibility in placement of the compass.

The ball compass usage instructions actually say it should be held 8cm away from the phone to avoid magnetic interference. I'm hoping though that there will be some magnetic "dead zones" on the N900 so it won't be necessary to separate the compass from the phone (but again, a periscope mirror allows exactly such separation, though it then looks even more kludgy....)

Further investigation will probably need to wait until the N900 is available to try out various positionings of compass/lens/mirror and find a positioning that prevents magnetic interference and allows clear focusing on the ball compass.