Embedded system for image processing project
Yes, image processing can be done using Microcontrollers and Microprocessors. You can either do image Processing using Arduino with OpenCV or MatLab. Or if you are more interested in Microprocessors you can use a embedded computer such as the Raspberry Pi(RPi) or Beaglebone(BB) which is more suitable for powerful image processing projects. RPi has an inbuilt GPU which is better for your applications but BBB can also be used for image Processing application considering the fact that it has a better and faster ARM processor. Since BB and RPi both run on linux you can use the most common OpenCV or simpleCV to do the task.

You can use Image Processing using BBB and OpenCV or RPi and OpenCV. OpenCV is an It has C++, C, Python and Java interfaces and supports Windows, Linux, Mac OS, iOS and Android.. I would suggest you to use OpenCV that uses C++ for BBB (C++ is faster compared to RPi and BBB doesnt have GPU so there is a chance to slow down processing) and use OpenCV that uses Python for RPi (python is much easier to code and RPi has a GPU) . I have used both RPi and BBB in the past but I would suggest you to buy a RPi for your application since its cheaper and has a huge Documentation online. 

Update : There are many OCR based algorithm's available online for OpenCV but are not that reliable. I think best Open Source OCR Engine is Tesseract. You can get more idea about this from the thread Tesseract or OpenCV for OCR.