The video after the break shows off several very impressive demonstrations of this technology using none other than Half-Life 2's Source engine: 1) VR Desktop is a "replication of the [technique] made popular by Johnny Lee"; 2) Zoom in by moving your head closer to the screen; 3) Peering allows you to look around the corners by tilting your head; 4) Camera rotation/spinning allows you to look around, "more like a Handycam"; 5) Ironsighting "allows the player to aim down the barrel of their weapon by tilting their head to the side."
If you're anything like us, you're already imagining this functionality in games using both the Xbox Project Natal camera and the PlayStation Eye. Afraid that new camera-based interfaces herald the death of traditional gameplay? ("I don't want to play Halo Reach by jumping up and down!") Fear not! This video is whispering in your ear, Core Gamer, and saying, "Don't be afraid. Everything is going to be alright."