After thinking about this idea more I had two ways that this could be worked.

1) Go from Signal ->A/D converter -> FFT (sort out the lows, mids, highs) -> software (Thinking I could boost different frequencies much like a wah) -> D/A -> amp

2) What about a non-linear circuit? For example, you have a sine wave, any old sine wave will do. What you would do is apply a certain mathmatical function to it. IE you could square the wave. Obviously this would make the sine wave all positive since a square of a neg. is pos going back to math. With a software programmable chip you could chose the numbers of the equation. So let's say you write an equation like ax+bx^2+cx^3+dx^4. The x represents the signal from the guitar, you would simply pick a, b, c, and d. In effect this would distort the signal. Not like distortion distortion, distortion as what goes in is not the same as what comes out (The signal has changed). My point is that maybe instead of simply trying to program software to make a "wah" sound or a "phaser" sound you could make your own sounds with the function. This function, and it's inputs would be able to be changed, allowing for all sorts of fun. I'd like some way of testing functions on sounds. That is, I want to know which ones are musically pleasing. If I could get a point to point wave into my computer, then I could use something like Mathcad to apply the equation, and play the output in some way.