UPDATE: Also works awesome with straight up glitter!
Enamel Girl posted this trick on her blog and I had to try it out. By applying the nail polish first to the side of a plastic bag you’re able to blend polishes that may not work for water marbling (like the chunky glitters) and potentially create any sort of design you want. Very cool. So I grabbed Color Club Frills, American Apparel Rouge and Wet n Wild Sparked, added wide swaths of them to the side of a baggie (in hindsight, thinner lines would have been better), then used a toothpick to swirl and blend the polishes. Initially I wanted to do just regular water-marble-type pull for the swirls but I got lost in all of the poking and got the edges all good and swirled up.
Once that dried for about an hour/while I did a report, I added a single coat of Frills to my nails and, before it dried completely, went back and laid the peeled polish on the nails like a foil. Got a little messy but whatever, just wanted to give this a test drive!
February 2012 Update:
This method will probably work better with parchment paper as demonstrated in the Creating Your Own Nail Transfers post. Use the same technique, but apply it on parchment paper instead of a plastic baggie for easier removal.