I backed them on Kickstarter so I got to see the DevKit1, DK2, and the CV1. The difference between the early versions and the end versions really came down to the software that handled the tracking. Compensating for movement lag and predicting frames to ease the jerkiness are really what converted it from a prototype to a viable commercial product.
That being said, it makes me laugh a little to see that Valve and the HTC Vive managed to outpace Oculus. Oculus had so much momentum and marketing buzz and they really dropped the ball on that one. Who knows how much of that was due to the FB purchase, but it definitely is weird seeing them lose their huge advantage.
It was the other way around. Valve had been working in VR for years before the first oculus prototype. Oculus contacted Steam and copied the tech they had. The Steam guys actually helped Luckey because it was the small guy doing the open source thing.
They did not take into account the selloff to facebook of all this information.
On top of that, Oculus definitely had more marketing/media buzz so they were ahead of Valve in the consumer mind. The end product might be closer to Valve's than to his original prototype, but he definitely had a small head start on them for the prototype and a huge head start from a marketing perspective. Valve all but shattered that.
Here's Palmer's first announcement in like 2012: http://www.mtbs3d.com/phpBB/viewtopic.php?f=140&t=14777