While it opens up a lot of doors, it also introduces a lot of limits on where you can move. You would need a large sized room that roughly matches the size of the in-game room so you could actually completely move around said room, and a game containing nothing but small spaces to navigate would lose a bit of that excitement of visiting new worlds. I think for the most part, the best of what you're imagining could be done with better hand tracking and/or motion controls, all in the comfort of a chair. But moving around the room, doing actions like ducking and whatnot? I hate squatting : It'd be good for a niche exercise game, but otherwise I wouldn't be terribly attracted to playing it.
Now, a lazer-tag type of attraction in a huge room that you could attend with a bunch of friends that turns you all into cool characters, has 1 to 1 motion tracking for all players, and pits you against cooperative challenges within the world it renders for you? That would be cool

Granted, interaction with virtual beings and objects would be a bit weird since you would always have the ability to move through anything, whereas when you don't have 1 to 1 control, your character can be stopped and limited by in-game geometry.