Inducing presence through fidelity – could vr be heading in the wrong direction?

https://www.youtube.com/watch?v=bEerPQHl_4k

With high fidelity, we are looking into another world. What would photorealism feel like on a large, high refresh panel?

How would a physics engine designed to match photo-realism handle science fiction and fantasy games? What about tactical competitive games?

Is this level of fidelity even possible with VR within the next several decades?

Or will we be stuck in the enthusiast hardware loop of "not quite presence educing, so more expensive widgets" forever?