A few of my less game-related RSS feeds are pointing to a Wired article which suggests that Mirror's Edge is a proprioception hack. IE, it screws up your sense of where you real limbs and body are.
I guess, technically, you can call motion sickness (which is what he's talking about) a proprioceptive effect, because it originates from visual cues not matching up to your body's more subtle cues about movement, speed, etc. But to imply it's something new and amazing is really pretty silly.
Motion sickness is a pretty complicated subject, and most people don't realize the full spread of cues and effects. For example, my mom is fine on boats, in cars, and so forth, but revolving cameras in movies and first-person video games give her serious trouble. Similarly, I have a friend who can play FPS games all day, but if you expand the view angle to more than ninety degrees, he gets really ill.
What we're seeing in Mirror's Edge has nothing to do with the fact that you can see her hands and everything to do with the motion of the camera. We're not used to this kind of bobbing, tilting camera work in a video game. You know the only thing it's been used for until now?
HORRIBLE MONSTERS. We use it in movies to show the viewpoint of a werewolf or some other slavering beasty. Why do we use it? Well, one of the reasons is BECAUSE IT MAKES PEOPLE UNCOMFORTABLE AND NAUSEOUS.
I will say that I am 99% sure Mirror's Edge is not doing some amazing new "proprioception hack". It's just making you (well, some people) motion sick.
It's riding the edge of providing too much visual data about motion your real body isn't doing. The more data it provides, the more realistic the game will feel... but the more people will tend to get motion sick. If that realism is a "proprioception hack", people's standards on the matter are way, way too low.