There are several types of artificial retinas being tested experimentally, and they all communicate to the brain using the eye's original nerves. As far as the brain is concerned, it's almost like someone unplugged one camera and plugged in another one. (It's not quite that simple, but the brain somehow manages to make sense of a messy picture.) Most retinal damage is on the light-sensitive cells, but the nerves that collect the information are still okay. If we can just figure out how to properly trigger the array of nerves, which cover the whole retina, then we could substitute our own camera.

Unfortunately, most artificial retinas trigger the nerves electrically, but electrical probes in nerve cells eventually go bad. One very interesting topic in science right now is how nerves communicate with each other and how we can artificially create some kind of interface between electronics and nerves. Maybe you'll be the one who finds a solution!

I haven't heard about these artificial retinas, although I am highly skeptical due simply to the awesome complexity of the nerve connections that run from the retina back into the rest of the brain. The retina does not, however, connect directly to the memory-storing portions of the brain. It connects to the vision-processing portion (I believe this is the optic tectum, although I am not sure). The problem, thus, is that each neuron in the retina must connect to a specific set of neurons in the optic nerve, and the configuration of the optic nerve is going to be different for each person. From there, the signals from the retina are actually processed into an image, and other parts of the brain run with that separately (which is also why it's possible not to remember something you've seen). Basically, there isn't a single CPU or even a small number of them like modern computers. Rather, each neuron is its own CPU, which means that if the brain is a computer, then it's approximately a one trillion-core machine!

The only way I can think of to create an artificial retina would be to create a culture of retinal tissue, and then graft it onto the back of the eye, and let the neurons sort themselves out. Brains - or any living tissue - is remarkably regenerative in that way. But I'm still not sure that would work - as well as the technical difficulties of doing this (you would have to take the person's eye out - and THEN put the eye BACK IN once you've added the retina!).

You have a good question. The brain is very plastic. For example, individuals can have half of their brain removed and still be able to re-learn how to do things that relied on the lesioned side of the brain. The process of seeing with the artificial retina is nothing different. We get information from vision, touch, audition, smell, and other senses. Our perceptions are largely constructed from these senses in order to fit with our schemas of the world. I am not clear how the artificial retina works specifically, but I would like to pose a thought experiment to you. I would like you to think of the sights (maybe even sounds and smells) you have in your dreams as coming through 'artificial' channels. You still experience these perceptions even though they do not come from an external stimulus, i.e. outside of your head and in the environment. The point I am trying to make is that perception has deep philosophical intricacies that we must keep in mind (excuse the pun). The film MATRIX is a wonderful example of this.