I always thought that as I did the first hours of my PPL that it would be so useful to be able to review each lesson later - it is a shame that all trainers are not video equiped. (Could be a good revenue source for the shcool too).
I think I would at least take a look at the legal issues involved before dismissing them completely, as it could have some major ramifications for all concerned if there were to be a problem later on.
In terms of the technology, it is all about getting small cameras mounted where you need them feeding into something to retain the images - could be a laptop for IP cameras, rather than a big heavy camera which would need much heavier mounting. If expense is no object have a look at the Axis range of IP cameras - they do some specifically designed for mounting in vehicles.