[rywang]

Very true. I work at a company building an alternative gestural input device (http://threegear.com). Here's how we have tried to address your points.

1. Gorilla arm -- keep your hands low. We support tracking and interactions literally 1cm above the keyboard / desk. We're mounting the camera above the monitor to achieve this.

2. We use gestures with built-in physical feedback. For instance, our click mechanism is a "pinch" which brings the thumb and index finger tips together. You can "feel" the physical touch event between your fingers when you trigger a command.

Shameless plug: an old video showing interaction with Reddit, Google Maps, browser. http://www.youtube.com/watch?v=U0WLh7WNxCI