Alan,
Well the system that Disney uses may not be called "waldos" but I have heard the term used in reference to moving mechanisms in the past. The Wii and WBos Kinect are different things really they are translating movement of the body to an animation.
If line of site is not available via moth or eyes, then more then likely they are using monitors inside of the body character to see. That is how Big Bird is operated. For live shows I think they try to stay away from monitors in the costume though. It is possible that there are screens in other parts of the face/body that are allowing the performer to see out. Don't forget though that you blink all the time and don't loose sight of where you are going.
Wish I could give you an easy answer on how these are done but it involved electronics and that is not my bag. The same "stuff" that is used in RC cars and planes can be found in these puppets. Do you have any clubs or stores in your area that deal with these. Best way to learn would be to get in contact with them and pick their brains. Radio Shack is another place where you can often find the components for the circuit boards used for these.
