Have a look at KNN Matting http://ihome.ust.hk/~dli/projects/knn/ http://ihome.ust.hk/~dli/projects/knn/. Their MATLAB implementation uses a similar style to yo

Have a look at KNN Matting http://ihome.ust.hk/~dli/projects/knn/ http://ihome.ust.hk/~dli/projects/knn/. Their MATLAB implementation uses a similar style to yours but is not as real time. They take single mouse clicks and spread them over a much larger window/bounding box. Only takes a few clicks on foreground/background to get excellent results.