Why bother with bioengineering once we have neural lace level tech? Just go pure virtual and you can have as big a castle as you want on a square inch of silicon.
A good point - maybe if there were proper measures - once you are fully on the silicon, you've really given up a ton of freedom. How do you get out of the silicon unless you have someone outside to help you? There would have to be safeguards. Like, what if your 'friend' outside the silicon decides he's not going to let you out unless you be worship him for all eternity or, (insert other ethical or not, but definitely human rights-wise degrading act), whatever. It might be that to avoid turning everyone into robot zombies, everyone would need to keep at least a toe in the real, with a way to get out for good, even if, the real is dangerous at 10 inches tall, because a wandering squirrel might bowl you over or whatever.