It's a neat idea, but without a dedicated component or an extremely high-speed RTOS, you're not going to come close to the level accuracy that's really needed to do the math and still allow interaction.
I don't mean to rain on the parade, but I just don't think they really have anything usable.
And I would expect latency for such heavy DSP work on a phone.
I'm not sure that's the purpose. I wouldn't think of this as being intended to be a fully usable product right now. They could be intending it merely as an interesting experiment to explore new possibilities for interaction with mobile and wearable tech.
Another CS student came up with a virtual keyboard using the iPhone's accelerometer[1]. It only had ~80% accuracy[2], so was it all that useful or practical? Probably not. But could it lead to another person or company refining the technique for production in the future? Certainly.
[1] Video: https://vimeo.com/49780741
[2] http://www.gottabemobile.com/2012/11/13/cs-student-turns-iph...
If it comes down to using something other than your fingers, someone has the nose working as a user input device:
Only so many times a company can say they've got their issues ironed out before I stop believing them.