I think the actual reading of the plates is a much harder problem than "Smartphone captures license plates" otherwise, I concur, fundable.

There are a number of open source libraries for this. Here is one: http://www.openalpr.com/

Eh, recognizing state versus state has to be difficult. Can't rely on color.

Could work in Russia, massive existing installed base of dashboard cameras.

It would be better though if the dashcam had GPS as well.

It's possible to get around it by selling a device you plug the camera into, and your device has built-in GPS. I think Russia's dashboard camera "culture" might mean the device is a much easier sell - in Russia "Monitor traffic" is a problem people already seek solutions for, while the dashboard cameras is a good enough quality video people don't have to pay for again, whereas in, e.g. USA you will have to convince people they have this problem in the first place, and to pay for the cost of the device including a good video camera and storage.

In Russia people buy dashboard cameras because there is less trust in the "system", and is consistent with the paradigm:

License plate reading, unlike, say, tapping undersea fiber, is not something you need either a government's resources or a government's ability to skirt the law to do.