This is a great approach that makes perfect sense.
From a purely technical point of view, it's actually the best VR headset currently announced, as both Project Morpheus and Oculus Rift are currently using lower resolution displays (1920x1080), while this will have a 2560x1440 pixel display. Oculus Rift is using the display of the Galaxy Note 3, this solution will be using the display of the successor, the Galaxy Note 4.
Another huge advantage over the current Oculus Rift/Morpheus prototypes is the fact that it has a digital camera built in. With Oculus Rift/Morpheus, if you need to take a short peek at the real world, you are forced to take the headset off. With a builtin camera, the image from the camera can be shown on the display, so there's no need to take the headset off.
Really the only problem is that the graphics cards inside smartphones aren't powerful. So while it actually has a better display with a higher resolution than Morpheus or Oculus Rift, the graphics will clearly be worse anyway.
What would be great is if there was a possibility to connect the device with a cable to a PC with a graphics card rendering the graphics, so that it could also be used as a full Oculus Rift replacement. That would almost make it the perfect VR headset solution.
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