I actually think the games/virtual environments that avoid attempting to recreate reality will be more immersive initially. Being in a cartoon world would probably avoid distractions about something not looking "realistic" because as long as it seems consistent to the world you're in, I'm guessing it'd be very immersive. If I'm in a Toy Story world (or watching the movie), I'm not really bothered that the physics of how a character moves doesn't seem to match any reasonable muscle structure because I have no expectation that it should.