The best tool to use for realtime MIDI visualization depends on whether you're a programmer or not, and if so what language you prefer. Most programming languages are capable of handling MIDI input and doing graphics. Here's someone using Processing (which is Java):
On the Mac, this can get you started using Quartz Composer:
Here's something for non-programmers, on Windows:
It might not be realtime, but this software is relevant:
This may be interesting, and has pointers to other software:
Then there's this:
It is surprising how few "polished" versions of this there is out there, given its potential.