Thanks for your nice comments!
The technique used here is basically the same as described in GPU Gems 3 (an seen in the demo video above) although I have not implemented every single trick. About the performance: The demo runs in real-time but it is way too slow to be used in a game. I have abother shader that is very well suited for application in games.
Here is a comparison of the results. The top image shows plain Phong lighting. As you can see everything looks very dry and hard. This comes from the fact that no subsurface scattering is simulated and that the standard "plastic-highlights" are used.
The middle image is my mid-quality shader meant for real world apps. Actually the subsurface scattering approximation is very simple but I think it is looking ok. The shader is also using physically based BRDFs for more natural highlights.
The bottom image finally is the very high quality but slow multi-layered texture space diffusion method described in GPU Gems 3.