I'm not envisioning it as a primary input device, naturally (although the deaf seem to get by fine). But I don't think I've ever been in a situation where a heated conversation made my arms tired; as a replacement for a few basic mouse tasks, I bet it could even improve ergonomics.
Just try it: raising your arms as if gesturing conversationally is way, way less stressful than reaching out to touch your monitor.
Also, the gorilla arm would go away fairly quickly. This used to make me tired:
http://www.youtube.com/watch?v=mPKbCsWLe4k
Now it doesn't. I expect people would get used to minority report interfaces, particularly if they didn't immediately try to transition from 8 hours of keyboard to 8 hours of minority report.
My real question: is source code for this demo available?
I work in construction, I spend my days holding 5lb drills in front of me. Using the standard gesture position (forearm down) your arm won't get tired during a day. I basically live my day in the 'gesture position' often for well over 8 hours a day, always with weights in them.
When the upper arm is lifted is when your arms get not so much tired but literally drained, which is what I think the Kinect will likely have to adapt to.