Yes, you could hook the permission checking methods and deny them. I think there are packages that do this already (or don't throw the Permission exception but instead return an empty contact list, etc).
just to add what the other commenters in thread said. Open pdroid is now the project you want to look at. Its open source but needs to be compile with the rom. Depending on your phone or if you know how to build a rom then its great if you want to fake permission data. http://www.xda-developers.com/android/openpdroid-brings-an-o...
The other alternative mentioned is lbe. The issue with lbe is that its a Chinese app thats translated to english and only distributed through xda found here. http://forum.xda-developers.com/showthread.php?t=1422479 . Now everything I've read and what others have looked into is that nothing malicious is occurring but of course YMMV. I've used it and I have very rarely found any issues blocking all permissions.
Also another good app is droidwall to enable data for apps based on wifi or mobile.
EDIT 2: It seems that the only "good/working" app is PDroid (and OpenPDroid for ICS). Unfortunately, it's only available for custom ROMs, and it's a lot of work to add it to stock ROMs. It looks like that this will either need a lot of hard work to do (and be hard to install), or Android will need to do it natively. Too bad neither option is very feasible...
The other alternative mentioned is lbe. The issue with lbe is that its a Chinese app thats translated to english and only distributed through xda found here. http://forum.xda-developers.com/showthread.php?t=1422479 . Now everything I've read and what others have looked into is that nothing malicious is occurring but of course YMMV. I've used it and I have very rarely found any issues blocking all permissions.
Also another good app is droidwall to enable data for apps based on wifi or mobile.