I know that the underlying digitial signing method Bitcoin uses for transactions is ECDSA (sep256k1 if memory serves). I've also read a few papers about performing ECDSA signing on certain kinds of smart cards. Has anyone merged these concepts and made (or attempted to make) a smart card that can sign a transaction with an internally-held private key?
Yes, there is Smart Card Wallet project, though there seems to be no clear indication on what stage the project currently is.
There is also hardware wallet by Slush. It's not smart card based, but works pretty much the same way. Also still in development.