Definitely; I really think it's hard to push buttons when I'm used to waggling the wiimote, even though it might be really frustrating.*snip* Arm/hand movement, on the other hand, like holding a machete or other similar item doesn't seem all that strange to me. If Skyward Sword was any indication, it's probably far MORE natural than button mashing (or primitive wiimote waggling) and natural is what I'd be going for.
*snip* Also, speaking of controls, one interesting aspect is also that no auto aim mechanisms would work as well as built-in martial arts abilities and things like that. 1) If it's based on your real movements, it's also a bit more based on your real skills and coordination, which could be a downside.
While first person would be the most obvious choice, I think it could also be done with 3rd person games (using a more traditional controller) but the developers would have to be a little more careful with camera angles, maybe have the camera still rotate/float around the game character but always facing the same direction and leave the actual ANGLE of the camera to the the person's head (at least vertically) to avoid having a motion sick gamer puking in his helmet, so to speak.
It would definitely have to be done right and it's probably not an easy fit for many pre-existing games right out of the box but if it's done right I still think it could be a great enhancement to the game experience that would be well worth the price as an optional addon.
1) Here's where being a deranged lunatic, a general kick-ass gamer, or Foxi4 comes in handy. You can prove just how good of a gamer you are. (And maybe Nintendo could make a Mario game that uses this helmet...)
I like the idea of a gamer puking; but I suppose the developers should try to avoid that in their game productions. I don't think I could've phrased your last thought any better; playing a Zelda/Metroid game with this thing does sound awesome. Wii Music - not going there; not worth the goofy dinosaur