All these videos are captured in real-time with no post-production- that's what the start of the video says & that's clearly false. Although the technology looks kinda cool, it would be far too expensive, it's unlikely to work well in most room set-ups, & would need a very dark space.

We had this thread before
http://gamrconnect.vgchartz.com/thread.php?id=152594&page=12

That demo is shot with a $1000 projector, it can be done cheaper ~$220 projector but it will look far removed from that and only work in a dark room with the tv brightness down.

Nice proof-of-concept but unless they have some secret projector tech up their sleeve I don't see this coming to the living room any time soon.

As long as they don't pull a 'Project Milo', they've got some interesting stuff there.

I have a think 600-700 dollar projector got it 2 years ago. it works ok with lights on(i play games and watch tv on it with the window open or light on sometimes), for this kind of stuff it would be fine with lights. I haven't looked into prices recently, but i am sure they have come down even further.

Edit: I use this projector http://www.amazon.com/Acer-Computer-EY-K0701-020-3D-DLP-Projector/dp/B0036R9ZKA    2,000 lumens

At the begining didn't it say they were using a kinect to do this? Even if that isn't the case I doubt it would be that expensive. 

No.  Previous patent images demonstrated how it worked.  The projector, because of Kinect, knows where you are.  So, where you are, it doesn't project. 

Your evidence that those statements are false?

It's projected to cost $500.

They've demonstrated it'll work in most room environments.  You'll need to do better with your argument here, because until you define what you think "most room enviornments" are, then you're basis is simply opinion not even a logical/rational opinion.

A very recent patent application also suggests that Microsoft intends to use this with conference rooms.

So, I could be all by my lonesome in BFE with an Xbox 8, Kinect, Illumiroom, and Skype, and be a part to a tele-conference. Each participant could have a camera on them,, which would allow Illumiroom to project each participant of the conference on the walls of a room.

What's the screen size you play on? That's the main determining factor.
The screen size in the demo video is about 140" (assuming the tv shown is 42") At that size The Acer H5360 gives of 21 fL on a proper reflective screen. Far too little to compete with a tv that's between 40-70 fL, nevermind projecting on walls and furniture.
http://www.projectorcentral.com/Acer-H5360-projection-calculator-pro.htm
With an 80" screen you're at 64 fL, that should be enough to extend the tv field on walls and objects that are not meant for projection, however that's only twice the size of the tv, not as impressive with only 20" borders around the tv.

It about 90-100 inches. I have the projector ceiling mounted about 12-13 feet away from the screen. I do agree it would be ricy, but I think its just affordable enough for some. or will be in the next few years. When i looked on amazon for some they 200 ansi lumens projectors for about 250-400.