[derefr]

1. The face-reading parts would be inside and part of the virtual-reality junk. (And, helpfully, would also enhance eye-tracking.)

2. Modern graphics technology has all it needs to generate realistic expressions on characters. Modern video-game characters instead look creepy because they're replaying a small pre-made library of expressions that don't usually fit the situation very well. If the character's face just mimicked the tension in the muscles of your own face moment-to-moment, this problem would disappear.

3. The argument that facial expressions (or body-language in general) doesn't add value is refuted explicitly by the fact that people prefer meeting in person, to meeting over video-chat, to speaking over the phone, to having a text conversation. The only thing each rung of that ladder adds to the previous is body-language-based interaction.

But these are all beside the greater point: the feeling of being in the same room with someone is necessary for the emotional regulation of your relationship with them. Skype doesn't give you that. VR, eventually, can.

[Houshalter]

And none of that requires virtual reality to do. You could have a video game with the characters matching your facial expressions. It would be just as pointless, but it could be done.

[derefr]

It doesn't explicitly require VR... but it does require having both "central vision" and "peripheral vision." Basically, to have the level of detail required to be able to read people's expressions off their avatars in a non-VR setup, you have to have their faces filling a large-enough degree of your vision that, in most setups, they're fullscreen on your monitor (you know, like Skype.)

To be able to interact with the world while talking to someone (because that's the reason you're in a virtual world rather than on Skype), you need to be able to see things going on around the person while focusing on them. So, you either need a grid of nine monitors, or this thing[1].

And you still can't have a natural conversation with more than one person (or especially express any status-regulation emotions involving looking at one person in preference to another) because tilting your head means you can't see the "central vision" part of your screen-wall any more.

If only there was some way for tilting or moving your head to just show you more of the virtual people and world around you, in a naturally-mapped way, you know?

[1] http://research.microsoft.com/en-us/projects/illumiroom/