Creating a system overlay window (always on top)

This might be a stupid solution. But it works. If you can improve it, please let me know.

OnCreate of your Service: I have used WindowManager.LayoutParams.FLAG_WATCH_OUTSIDE_TOUCH flag. This is the only change in service.

@Override
    public void onCreate() {
        super.onCreate();
        Toast.makeText(getBaseContext(),"onCreate", Toast.LENGTH_LONG).show();
        mView = new HUDView(this);
        WindowManager.LayoutParams params = new WindowManager.LayoutParams(
                WindowManager.LayoutParams.TYPE_SYSTEM_OVERLAY,
                WindowManager.LayoutParams.FLAG_WATCH_OUTSIDE_TOUCH,
                PixelFormat.TRANSLUCENT);
        params.gravity = Gravity.RIGHT | Gravity.TOP;
        params.setTitle("Load Average");
        WindowManager wm = (WindowManager) getSystemService(WINDOW_SERVICE);
        wm.addView(mView, params);
    }

Now, you will start getting each and every click event. So, you need to rectify in your event handler.

In your ViewGroup touch event

@Override
public boolean onTouchEvent(MotionEvent event) {

    // ATTENTION: GET THE X,Y OF EVENT FROM THE PARAMETER
    // THEN CHECK IF THAT IS INSIDE YOUR DESIRED AREA


    Toast.makeText(getContext(),"onTouchEvent", Toast.LENGTH_LONG).show();
    return true;
}

Also you may need to add this permission to your manifest:

<uses-permission android:name="android.permission.SYSTEM_ALERT_WINDOW" />

Following @Sam Lu's answer, Indeed Android 4.x blocks certain types from listening to outside touch events, but some types, such as TYPE_SYSTEM_ALERT, still do the job.

Example

    WindowManager.LayoutParams params = new WindowManager.LayoutParams(
            WindowManager.LayoutParams.MATCH_PARENT,
            WindowManager.LayoutParams.MATCH_PARENT,
            WindowManager.LayoutParams.TYPE_SYSTEM_ALERT,
            WindowManager.LayoutParams.FLAG_NOT_FOCUSABLE
                    | WindowManager.LayoutParams.FLAG_NOT_TOUCH_MODAL
                    | WindowManager.LayoutParams.FLAG_WATCH_OUTSIDE_TOUCH,
            PixelFormat.TRANSLUCENT);

    WindowManager wm = (WindowManager) getSystemService(WINDOW_SERVICE);
    LayoutInflater inflater = (LayoutInflater) getSystemService(LAYOUT_INFLATER_SERVICE);
    View myView = inflater.inflate(R.layout.my_view, null);
    myView.setOnTouchListener(new OnTouchListener() {
       @Override
       public boolean onTouch(View v, MotionEvent event) {
           Log.d(TAG, "touch me");
           return true;
       }
     });

    // Add layout to window manager
    wm.addView(myView, params);

Permissions

<uses-permission android:name="android.permission.SYSTEM_ALERT_WINDOW"/>