Ok, don't let the 5 axis scare you. What I'm thinking of is an arm that has 5 joints on it(hence the 5 axis) each joint has a sensor to determine relative rotation of the joint.

The sensors could possibly be done with old mouse sensors(the rotational ones, not the laser based ones).

Heres a list of the joints that would be needed, (1)a base rotational and (2)arm elevation, (3)Elbow angle, (4)Wrist Rotational, (5)Wrist Angle.

The sensors could be hooked up to one or more arduino's. (Speed would be the limiting factor, as the sensors from mice are not fully indexed there is a chance of missing a "rotational click" if not fast enough to detect)

The math to locate a point in 3d space is a basic IK(Inverse Kinematic) Chain. I believe it's basic trig functions.

If we could get it down to a plan/kit they could be sold like the makerbot's, etc... and be a source of revenue for the group.