You must watch this. This is a concept but a pure reality for the next xbox. This technology is awesome. http://www.afterdawn.com/news/article.cfm/2013/04/30/a_look_at_microsoft_illumiroom_a_projector_built_for_the_next_xbox_and_immerse_you_in_the_game?utm_source=newsletterENG&utm_medium=email&utm_campaign=20130503
I think a big issue for this would be practicality. Another would be how much it adds to your gaming experience for the price; there's a risk this could be just too gimmicky.
If the projector is supposed to be on a coffee table directly in front of the TV screen as they show in their first diagram, how would you avoid a nasty light reflection on the TV itself?