1. A system for combining virtual images with a real-world scene within a field of interest for an observer, said system comprising: a range scanner scanning the field of interest and generating range data indicating the distance of real-world objects within the field of interest; a computer model simulating a virtual entity and producing a virtual image of said virtual entity at a location within the field of interest; means for generating masked virtual objects from said range data and said virtual image indicating those portions of said virtual image that are visible in the field of interest; means for combining said masked virtual objects and a real-world image of the field of interest to create a combined image in which said virtual image appears in the real-world image; and display means for displaying said combined image to the observer.