I heard something about this in one episode of the podcast for mobile gardens - the one with Michael Tyson, the creator of Loopy. During the discussion, Michael explained that he had to include some code in order to filter out the sounds that came through the microphone in real time when other sounds were playing on the speaker.
Based on this discussion, it seems quite possible to play and record at the same time, but I'm sure you will have to do your own filtering to avoid recording the sounds you play.
source share