Maybe it could cause some mental health issues, maybe it could help with some mental health issues, probably depends on the applications used. It would definitely be good to see studies done at some point. But I expect the conclusion will fall somewhere under the generalization that devices are mere tools, and how/whether any tool affects our health is really determined by how we choose to use them—ie. properly or improperly.
As what appears to be an isolating device that seeks to replace your reality with one created by Apple or Disney or Comcast or whoever it seems pretty obvious what the danger is. It’s interesting that people don’t recall that Ready Player One is a dystopia, not a paradise and that wearing a mask in Star Wars usually makes you a villain.