http://www.youtube.com/watch?v=Jd3-eiid-Uw

Amazing, huh.

Indeed the effects are, I've only seen one other instance of it used outside of this however I can't tell you much about that, but what I will say is it was to do with Television more than gaming.

The one problem I can fore see is that such interaction is only viewable by One Person. If you were to do a proper visual experiment of the difference, you would have to have a camera running as the person interacting and that as a person sitting out of the interaction. I guess it's possible to do split screening on modern day HD's of enormous size but definitely not on the small portables that some people might find in their bedrooms.

This is why such systems wouldn't work in a cinema unfortunately because to every individual would require a different perspective.