This article mentions a new HDR camera mode that's available in Android 4.2:
but my Galaxy Nexus doesn't show that option:
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I've had a little look at this now that Android 4.2 source is out.
It turns out that HDR isn't done by the camera app itself, it's a scene mode that needs to be supported by the operating system implementation and/or drivers.
The camera app will remove the HDR button if:
So in short, the HDR mode is implemented by the operating system's camera driver itself and can't be added to the standard camera app without delving into the OS source. I've not done this yet, but if I do figure it out I'll post an update.