There's been loads of fantasy AR interfaces designed and kicked around for ages, but before anyone can start making them though you have to get to the point that the technology is available to test on. VR was stuck in the same place that you bemoan about for AR for ages before things like the Rift started showing up and available for people to actually experiment with. Heck we're still in the crummy interface stage of VR and most of the games that have come out aren't that deep or engaging coma

> "I am in a different space and not here with you", but with AR you are socially signaling "I'm here but I'm projecting a mustache on you for my own amusement and partially ignoring you while I watch funny youtube clips" which will make people uncomfortable the same way Google Glasses did.

I don't think the difference here is as big as you make it out to be and what most people didn't like about Glass was the camera not the screen. Neither of those messages are particularly acceptable when a person wants to talk to you. If AR is actually useful social etiquette will adapt like it has for every distraction machine that has come along.