This looks promising, but it needs some refinements and additional features to be truly useful. As it is, all it does it when the caps key is pressed is flash an image on the screen for a second. After a second, it fades away and there is no longer any indication that the caps key is on. There are no prefs where a user could specify how long the image should remain on screen (including the option of "until caps key turned off").
The image appears at the bottom of the screen, just above the dock. It would be more likely to catch a user's attention if it was centred vertically. And for those of us with multiple monitors, it would be nice to have it appear on all screens.
There's no need for the menubar icon, especially as the only thing it does is allow you to quit the app (it doesn't even change appearance when the caps key is pressed). An option to disable the menubar icon would be nice, and what would be even better is to make CapSee a pref pane with no menubar icon.
Lastly, it would be nice to have an audio warning in addition to the visual warning.