Well, when i asked my colleague if he ever walked into a wall using the system, he said he had - he was trying to pick up some ammo, but it was about a meter off (in the game, compared to where it was displayed on his HUD).
He said its not perfect but that it was enough to 'fool' the user into being able to interact (to the extent of shooting the monsters, and seeing them duck behind buildings etc)
When standing on a point, you can loko around and it mapped well - the headgear had position/orientation type things (didnt go into too much detail)
Oh - he also said that they were using differential GPS, but that was the year that they turned off the scrambling (not the right word, i know) - and DGPS isnt much better than the unscrambled GPS (something about propogation time and atmospherics - been a while since we talked about GPS)
Wyzfen
note: see my earlier post for more info