I like this idea too. Not just for multilingual input; for ordinary use as well. I.E. after pressing the dead key to generate an acute accent, all the keys which support acutes would be shown as such (e.g. the E would look like É) until the next key was pressed. This would simplify life for people who don't spend all day long at the computer.
I'm not sure if the cost would be too high, because this would mean manufacturers only need to build one model of keyboard instead of all those different ones for different countries. And what about people who are always customising their keyboards - no more messing around with felt tip pens, just a simple, clean, hardware solution. People would love that. Or is that just me? Pim Blokland