Just a quick question.
Can this:
be done with image processing on an iOS device
You should be able to do this just by looping and drawing the circles in black and white, and then using that image as a mask for your image.
Here's the first link I found on Google about CoreGraphics masking, which you can probably adapt for your needs: http://cocoawithlove.com/2009/09/creating-alpha-masks-from-text-on.html
I'd imagine drawing lots of circles is something you can figure out with some Googling of your own.