Wow- that was pretty damn cool, especially the treadmill. It looks like the treadmill was laggy though...it'd keep going for a second after they stopped walking. Also, I think a helmet would be superior to the screen. You could have an even wider field of view, including the up and down directions (you couldn't look up in this sim) and best of all...3D!!!! Also, those LED's wouldn't be necessary, and you wouldn't have them washing out the screen.
So, with my idea, it'd be even MORE visually immersive, but you'd lose actual walking and the getting shot. It'd probably be 80-85% as good for under $350-$450 in accessories (gun, helmet, maybe a kinect).
Maybe a good idea to keep someone from walking too far while still being able to turn their whole body would be to calibrate with kinnect. You walk around the field of play, defining your boundries. If you leave those, the game pauses or you get one of those "leaving field of battle" timeouts.