The problem is as soon as you get somewhat out of view of the camera it doesn't work right. It's a cool concept but in the real world probably wont go anywhere.
Yes and no. Whenever introducing a new technology, it needs to be in a form where there is little risk to the end user. This is what a lot of the game market is all about. I can easily see this technology go into a game such as many wooden maze games on the iPhone / iPad already. From that, you have a public with a more familiar technology and you can make production / enterprise apps from it.