Outside of not being able to see the effect(which leaves me looking at a warped image), I don't like how twitchy the movement is. Humans don't visualize things like that normally, so it just looks like a bad implementation of first person viewing that would be even worse with VR. I haven't tried it yet so I can't say from experience, but it seems like this sort of thing wouldn't take advantage of the benefits things like Oculus is said to have.
I don't fault Oculus or their hardware for it in this instance. Shoehorning has never worked, and it won't work here either. Oculus needs software that is made with it in mind, fully. Sure, some games like Metroid Prime will certainly move to it smoothly, but it really needs software to call it's own that would have a hard time being played outside of it. That one demo of the game within a game was a nice concept to build on.
When I went to TooManyGames this year they had a little area with the Rift you could try out. I was in this demo where you were just looking around in space, with all of these Star Wars spaceships flying around. I gotta say it was pretty fantastic trying it out, and I can agree with this statement as a result.