edit: well, I think I messed around enough to answer the bulk of what I was after for myself. I edited my answers in below. Hopefully it isn't too confusing to read, and maybe it will be helpful to some. Review in summary: I am going to keep it, but has a couple annoyances.
I know Virtual Desktop is the porn app, but I have a bunch of specific feature questions if anyone knows.
Any chances Valve will improve the desktop view in Steam? I realize that isn't really a question anyone but Valve can answer, but have they mentioned the desktop view in the slightest? I'd rather not drop $15, but not a big deal. I can wait if it looks like improvements are coming.
How fine are the virtual screen settings? For example, can you set specific virtual resolutions like 1920x1080? As far as I can tell you can just adjust the size in inches, but not control specifics of the rendering.
A: I didn't realize it was just 'streaming' the desktop so the resolution is tied to whatever your actual desktop is set to. Makes more sense now why the settings are simplified.
Is it intercepting windows rendering or any ideas how it is working under the hood? Are applications wrapped in some way, or does windows/apps think they are being rendered out to another device and none the wiser?
A: As far as I can tell it is capturing the desktop, similar to how streaming software works, and rather than spitting that stream out to a video file or streaming service.. renders it to a surface in VR. This causes a few minor problems with services like Netflix (in browsers that support its DRM), but anyone familiar with streaming should be familiar with these sorts of things. For the most part is a non-issue.
Any weirdness with 'virtual frame rate' versus headset framerate? For example if you are playing a game at 60 FPS and headset is rendering at say 90 FPS, is there... virtual... tearing? Is that even a thing? How does that work.
A: I need to do more testing here, but overall it is pretty solid. There might be a tiny bit of input delay. Nothing compared to streaming over Steam to another computer, or Ps4 to Vita, but I wouldn't entirely rule it out if things like frame perfect links are a concern. Again, haven't tested extensively.
I have some upper back problems which sometimes requires me to lay entirely flat for a little while. I'm thinking this could be a good way to kill boredom by watching youtube or whatever. Any problems I may run into using Virtual Desktop and laying completely flat? I know some apps are bad about adjusting easily when they have decided "this is in front you, you must face this way FOREVER." Any other problems I might not be considering? If I am in the movie theater thing and lay down am I going to be under the chairs or something?
A: This works, but has one pretty annoying flaw. You need to enable the 'floating' option and then when you center the display it will do it wherever you are looking, which works pretty well. BUT for some reason the software really does not like it if you are looking directly up. Which unfortunately is exactly where I need to look. As far as I can tell it is not a tracking issue. Spending a few minutes I can usually get it close enough, but it takes many tries and I am extremely reluctant to mess with it once I have gotten it in a reasonable spot. It would really be perfect if this wasn't such a hassle. Considering I can get it working with fidgeting I am going to hold on to it in hopes it will get fixed.
Any good reviews or anything else I should know? Trying to Google specifics is kind of tough because it is a bunch of tongue-in-cheek porn discussion, and virtual machine junk.
e: I guess this is a reasonable case for Steam's refund system. I think I can determine if it suits my needs in 2 hours, and I've never refunded anything before.