These are the main challenges. I strongly believe that an LBE should be a mix of entertainment, education and retail in a theme environment. Technology is not a mean in itself and should in no case be the only draw to any VR center, although this seems to be the case in many centers now. In Atlantis Cyberspace, for example, women would probably love to swim with dolphins on waterbed while their husband are flying in fantasy environment and the kids are in an action adventure scenario. It is obvious that who knows how to create the proper dynamic of an LBE center with the proper mix of entertainment, education and merchandising, will surely see the doors of a new market place wide open.
Many people try out immersive VR games currently available and end up being disappointed.
You're probably right. A POD based interface here is adequate. We still have a lot to learn about it in the VR field. Overall, I think that to respond to your question we have to distinguish VR technology and VR content. Of course technology will get better but this is not the key.