http://www.mode7games.com/content/game.htmlThat is an MP sword fighting game. It uses inverse kinematics and procedural animation. Oh and it runs on Torque! The maker has an old thread on the Garage Games forum, where he discusses releasing the cloth code. I think I want to talk to him about how he did the procedural swordfighting. There is a demo available for download. Unfortunately, the game has only been compiled for windows. (with TGE you can theoretically do linux, win, mac, but you need to build for each target platform).
Imagine mating this thing to a wiimote!
This article is interesting. It talks about an affordable motion-capture system that could be used for game input (as well as more traditional motion-capture applications).
Well, it would be affordable if it were mass produced, anyway.