Machine vision is a very broad topic. The most common use for machine vision is in quality control - make sure your product looks the way is should before it's sent out. You could use any number of defect detection applications for as project(bent IC pins identification, pill/m&m candy color Identification, coin sorting). Another interesting problem is character recognition, when a computer identifies characters in an image and converts them to ascii text.
The basic algorithms involved in machine vision are fairly simple. Most involve a 3x3 matrix of pixel scaling values. The matrix works like a 2 dimensional FIR filter.
Getting good tools will be tough for machine vision applications. Tools tend to be very expensive. If you have access to Labview or matlab both have good image processing capabilities. You could write everyting in C++ or Visual Basic but it'll be a fair amount of coding. Cameras and image capture hardware is quite expensive. If you could buy a cheap digital camera and take test pictures to run through your algorithims. The Character identification would be the easiest problem as far as tools are concerned because you don't need a camera you could use screen captures on your computer.
Hope this gives you a start on where to look.
Brent