We need VistaVision!
If only every house had a semi-curved screen that we sat in while playing games. Then we'd get that peripheral vision that Clubberjack wants. This would at least provide that physical form of immersion that makes you feel like you are really there. The closest I've ever come was when I closed all the shades of my dorm room and turned out all the lights, just so I could play Silent Hill in total darkness. At least that way my eye never got distracted by light falling on my Texas Flag or whatever movie poster I thought was cool at the time. The second closest was the time we hijacked a conference room at school and project Halo onto every wall. That was immersive, but in a different way: you couldn't look at any point in the room and not see Master Chief. And if you closed your eyes you still heard "Killing Spree" or that random player yelling cause some guy on his team with a character named "Jesus" just fragged him, forcing the game to print "You were betrayed by Jesus" on the screen. But I digress...
The emotional immersion seems like a tricky subject. At least with physical immersion there really is not much we can do. I beleive that until we get those mini-Imaxs in the living room, its impossible.But immersion through emotional manipulation is attainable, as it helps players get into the "zone" and lose track of time.
As for CJ's question about multi-linear emotion, I want to believe it is possible, but lately I find myself agreeing with Warren Spector's GDC talk (I tried to find a link to his slides, but they don't seem to be posted). He said that multilinear plots end up diluting the whole story. In a way, I think this concept would have manifested itself in another medium. While live action roleplaying, murder mystery theater and renaissance faires seem to delve into this area, none of those seem to really achieve the personal emotional ride that even a simple Hero's Journey story can.
There are also production issues limiting this sort of thing. Every game that has tried to have a true branching story has had a hard time doing it right, and if they did it took forever. (Feel free to correct me on that one)
I think it will take a Will Wright-esque emergent system game to really allow a multi-linear expereince that still has emotional weight.
The central mechanic for emotional manipulation would have to be empathy. To do this:
1. The on screen agent of action can not be the player. "I" would not be killing nazis and there is no way that digi-hot girl would be talking to me
2... Well, CJ, I'll let you add the second item to this list and we can keep a running tab.