Thats really interessting.
Some time ago ive seen a similar technique using a 3D-Helmet with which you could explore/see ancient ruins of...i think it was Heidelberg...while moving through the real city.
It showed the real enviroment while walking and blended in the virtual enviroment when you stopped moving for a while.

In fact this could be the future of gaming - just imagine an empty gym in which you could play every game moving through the real world. So a lot of genres would be possible e.g. adventures, shooters or training simulations like a driving school simulating difficult traffic situations while driving in an empty area. Kind of a Wii 2.0