Yeah, thinking about it, it makes very little sense when looking at the way people actually play MMOs. In a vacuum, this technology could be a game changer: but only if people were playing these games as they were envisioned in the heady days of Ultima Online, with everyone actually roleplaying all the time.
This isn't what we are doing though, once we are ingame: For most of the game, players will do things that do not involve staring at other people's avatars for any amount of time. If you are in a tense heist situation where you're trying to capture someone else's ship (because that terrible idea is apparently still in the game?), you are not looking at your victim's facial expressions as you shoot him with your spacegun. What you get, then, is a piece of tech that takes money and time to develop, takes up valuable CPU cycles and setup time, all to enhance one little corner of the game which is deeply irrelevant to whether or not the game is going to be good.