Anyway, this is 100% Kickstarter material.
I would easily pay $5 just to show off this functionality to friends when we're hanging out (but I agree that it should be kept around the $1.99 price point). The novelty here is huge.
A lot of music apps are intimidating to most people but this is the most intuitive way to take human musical creativity and make a structured, manipulable track out of it. And trust me, most human beings can hum a tune/beat out. It's instinctive so the market for this is huge.
I recommend Kickstarter rather than just shooting for the App Store because it's going to be tough to go viral and get easily discovered on the App Store. Kickstarter, in addition to the money, will get you a solid fan base before you get on the App Store which is really important these days. It's just too easy to get lost among all the other apps, no matter how novel your entry might be.
So get on Kickstarter, raise a decent amount of money to get a very polished app ready, but more importantly, use the time to get your concept viral BEFORE debuting on the App Store. You won't believe how much publicity is generated by the weekly updates that Kickstarter projects provide. Each week you give a little nudge to all the supporters through your product development updates and each week they're reminded to tell friends and family about their backing. The press will of course catch on and you'll get that steam too.
Good luck to you guys. This is definitely at the intersection of liberal arts and technology that Steve Jobs loved touting.
If you guys want to talk more about strategy from here on out, check my user profile to get in touch. I'm definitely supporting this project.