Holy Egg Freckles! A Chinese developer has released handwriting recognition software—both Latin and Chinese alphabets—for the iPhone. Similar to Graffiti, the classic writing software for Palms, you can setup HWPen from Installer.app to give you an a writing area that can take over the standard keyboard at the touch of button. It’s a 1.0 beta version, but it works. Screenshots and more info after the jump.

You can download HWPen today using Installer.app. Go to “Sources,” click on “Edit” and “Add” a new source:

http://iphonecake.com/src/new

Then refresh your sources and look for HWPen in the iPhoneCake packages category. Install the software and restart the iPhone.

You will have to restart your iPhone.

The software is still in beta and it has quite a few errors—it doesn’t work correctly in landscape mode and it doesn’t appear in Mail.app for now—but it works a bit better than Doonesbury’s original Newton (I just started using it, though), although not as good as later incarnations of the Newton or Graffiti, as you can see in the video. But it’s a start and hopefully it will get into a solid alternative for the people who hate the on-screen keyboard (I prefer the keyboard myself, it’s just a lot faster than I would ever be doing character recognition). [Hanwang via ModMyiFone]