All this time in my searches for a musical instrument I had failed to see the instrument that is most like what I've been looking for called the Theremin http://en.wikipedia.org/wiki/Theremin. Although the real Theremin musical instrument invented in the 1920's uses a method of control that you don't even touch but control two oscillators by moving your two hands within the proximity of antennas as seen below with the creator, Leon Theremin playing it in this video.
They do also now have virtual Theremin instruments that produce sound like this using a mouse or touchpad much in a manner of how I had planed to have control. One difference in what they do and the way I had planed is that they just have a single oscillator were as I had planed to use the touch to control midi events with multiple voices. To start we also could play with this simple single oscillator method to get a better idea as to the speed of the touch response of our input devices. Later we can also devise a method to convert the touch plane into midi events as we had originally planed if we find it to be feasible. So at some point we could basically merge the VMPK (Virtual Midi Piano Keyboard) with a touchpad version of Virtual Theremin Instrument like Ptheremin. Another difference in the Theremin is it was originally designed to be a mono voiced instrument. We could start out as mono voiced but we had planed to be multi voiced using the multi-touch abilities of the new touchpads. I have so far found a few open source code projects that relate to the Theremin that might be useful that I will begin to document here. One of the best projects I found so far is the Theremin http://theremin.garage.maemo.org/ . I've only begun to look at the code and as yet have not figured out how to compile it and use it on Ubuntu but the example video links show it in action much as I had hoped to have in some ways. Also another cool bit of code I found that relates to Theremin is Ptheremin http://sourceforge.net/projects/ptheremin/ That is python code that again is much like what I was looking for. It provides a very good example of some of the parts of the user interface needed for a midi-pad device. There was also some Synaptics code for a theremin instrument that used the Synaptics touchpad as an input device, but I failed to find the source code for it and it was compiled for windows so I'm not going to document it here but only to say it does or did exist. From this I learned that I need to widen my search for instruments like this before I get stock in thinking of doing something is one way when there are many ways of doing the things we want and with code that already exist. So best we keep searching before we finalize on the development of an idea.