Can't say Picture in Picture was ever really a feature I could get into. I've used it a few times for LAN parties to play two Xboxes on one big screen but after I bought HD Dish I couldn't really do it anymore for television.
This however... speaks to me in a whole new way.
The next step:
Put colored IR LEDs on the shutter glasses. Add head tracking. Add one of those ultrasonic targeted speaker setups and you've got something really cool.