DARPA set the challenge to reform shredded documents into a legible state, which was won two days before the deadline by the rather admirable named All Your Shreds Are Belong To U.S.
The team developed an algorithm that measures the shape, individual characteristics and markings on the individual pieces, looks for similar chunks and suggests these possible matches to the end user. The test conducted upon it was a team being given the task of reconstructing five documents, shredded into over 10,000 pieces. Full success of this gave the team a $50,000 prize fund; but that's not the main of your concerns is it?
We're talking about DARPA, so this has to have the military gain:
The goal was to identify and assess potential capabilities that could be used by our warfighters operating in war zones, but might also create vulnerabilities to sensitive information that is protected through our own shredding practices throughout the U.S. national security community.
But don't feel disconcerted that your choice of sensitive document elimination is just too easy to crack, as the group spent roughly 600 hours both writing the algorithm and solving the paper repair challenge. The technology is only starting out though, so keep an eye on it...and your outside paper bin. It redefines the possibility of ex-stalking.