Violin bow position tracking with SMD LEDs and photoresistors
I like it.  Keep it simple to start with.  With two LED's of the same color.  Then you'll just see two peaks as the led's go by... you'll have to figure out which end of the bow the signal is from.  (or do some color tricks later.)  For the LED drive circuit, a 9 volt battery, two white leds (Vf ~3.0 V) and a resistor to limit the current.  Something around 300 ohms would give ~10 mA of LED current.  

On the detector side, I might use a photodiode.  But lets's keep it even simpler.  Get another 9 volt battery,  a light dependent resistor (LDR) and another resistor whose value we will need to determine experimentally.  The LDR decreases in resistance when the light shines on it.  So put the two resistors in series with the battery and measure the voltage across one of them as you move the led around.  Depending on which resistor you choose (fixed or LDR) your signal will either be an increasing or decreasing voltage as the led goes by.  Now play with fixed resistor value to give reasonable signals..
 And now make some music :^)