A friend made an Ibanez jem style guitar and the inlay was made with epoxi and wood dust.
And it looks like this
More pics here
http://www.guitarraonline.com.ar/phpbb2/vi...sc&start=45
LOL here some guys called "Les luthiers" made some strange instruments and play them live on the shows, they have a guitar like that.
Check them out:
http://youtube.com/watch?v=W4h7-ltMo8w