I thought a 1:1 sword fighting game sounded cool until I tried Wii sport resort. The stick fighting wasn't all that fun, had more fun playing table tennis.
The problem with 1:1 sword swing is a real sword has weight as well sword will slow or come to a complete stop when you hit something. I wonder how can someone develop a 1:1 sword fighting game when someone can swing the controller ( or arms in Natal) around like a madman. It's tough enough to make a descent AI with normal games. I feel sorry for the guy who has to program an AI to handle a gamer swing their controller/arms in all directions.
As far as how you can move your character with Natal , it already been shown how this could work . With Burnout you move your right foot forward for gas , move your foot back to brake. It could be a simple as raise your left arm up to go forward , down to go backward , scratch your head to turn right, grab your behind to turn your character left. With Burnout they probably could program you jump up to up shift and bend down to down shift.