Funny you say that (and also your mention of the VFX unit) I was lucky enough to have tried out the successor to the VFXR-1, the VFX3D back in 2005 in Japan. I've also owned the Sony HMZ-T1 and still currently own the HMZ-T2 and of all my VR experiences nothing has come close to the level of immersion you get from the Rift. The biggest issue with the VFX3D was the latency. It had head tracking but the delay between your real life movement and what you saw on the small low res screens was terrible. I remember feeling sick almost instantly. The framerate was horrible too...that and the fact that the FOV must have been around 60-70deg at most.
What makes the Rift so immersive is how accurate the head tracking is - only in a very few demos does it feel delayed and I'm sure that's down to the programming. Even though the Rift doesn't offer the same FOV you have in real life, it's the closest thing you will get from any HMD - for me it's not far off my own peripheral vision.
The problem with things like the HMZ range from Sony is that they are more like 'personal cinemas' that VR handsets - zero immersion other than the 3D image which is still in FRONT of your eyes. With VR you are IN the game. It's hard to explain but games you've played before start to feel like actual cities or locations that you can 'remember' visiting.
The other big pull factor with Oculus is their price point - the consumer version will be similarly priced to that of the Dev Kit ($300 US) which is ridiculously cheap for what you get. I paid R11000 for my HMZ-T1 and that was almost 2 years ago now. The other big improvement which will also eliminate a lot of the VR sickness is positional tracking. It's a bit strange still when you lean forward toward something or someone in game and you don't actually get any closer.
I don't think it being niche will actually be to much of an issue personally...at least to start. If you consider hardware for simulators; whether it be driving/racing sims or even flight sims - there is still a market for those. I do believe there is a HUGE market for this outside of gaming though...or at least traditional gaming as we know it.
I don't see it replacing the hardcore gamers' 27" LED for the odd competitive BF3 game but from what I've seen already coming from some of the smaller Indie developers working on software specifically for the Rift, it's going to open up a whole new world of 'experiences' - there is some seriously exciting stuff coming within the next year. Already, for me, I can't imagine going back to playing Half Life 2 with a mouse and keyboard.
I backed another product on Kickstarter called the Virtuix Omni which will take VR just that extra step into being fully immersed but I can see 'games' such as running or jogging simulators being a big thing on that, together with playing FPS games. Imagine going for a run on the moon, or Mars? Or even just taking a walking tour through pars of the world that you otherwise would never get to opportunity to explore? 2014 is gonna be an exciting year for gaming