This can be done.. however you need the Pro render-to-texture feature.

If you have pro, then simply render the view to a texture, and then map onto an entity Then you will have simply a rendered view of you camera view on a sprite

Now you must apply an actual distortion pixel shader.. i currently dont have one, but such things aren't to hard to find.. i think Nvidia has one on their website ( do a search for nvidia postprocessing or some such).

Perhaps the easiest way to do it is to use a bump environment map technique.. there are several available on this forum, and instead of a reflection map use your render view texture, then just mnodify it with the normal map.. and then make the whole thing slightly transparent.