I have been looking into doing something like this myself but I have not managed to find a way yet. The way im thinking about doing it right now is to cover the screen with a black sprite then place white sprites where I want things to be visible and render everyhting to an image. Then I would use a fullscreen shader and pass the image to the shader which would cover the black areas but leave the white areas covered. I am just waiting for AppGameKit v2 templates for VS2010 before I will try it since it requires both the new fullscreen shaders aswell as the render to image command.
As for performance, I have no idea how well it will run but im mainly targeting PCs so im hoping this method would not take to much effort for the GPU.
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