I am thinking gloves or other wearables that could provide force-feedback to help us correlate our physical actions to the virtual interface..
Are we making progress in those areas at all?
Heh, sorry to disappoint but I've not done IxD design work/research of that kind since graduating, and not actively kept up with developments. Basically my well-informed thoughts are limited to "one of these days I'll save up the time and money budget to get a VR system, a gaming desktop powerful enough to run it, and the peripherals, to try those out and be overly critical of them, and I am fully aware that I'm lying to myself right now."
I'll indulge myself with some big-picture speculation though - but I want to emphasize that it's just that: speculation!
I'm sure that there is progress being made, but I suspect the major breakthroughs won't be made through VR, or at least not the gaming side of it. The reason for that is that game design is built on top of existing hardware, which in turn drives the need for more specialized hardware, so ultimately that will result in more specialized, niche tools.
Let me expand on that: we're talking about making "progress", but progress by which metric and for which purpose? What is "progress" in a VR game context? (To tie this into the peripherals you suggested: those are one possible solution, but to which problem exactly, and is that really a problem we're struggling with?)
Let's take graphics in games as historic point of comparison. For decades, marketing has tended to focus on "realistic", "next-gen" graphics. But given that a game with abstract pixelated graphics can still be extremely engaging, and that a game with extremely realistic graphics can still be boring, we might be over-estimating the value of realism in games there. To make an analogy-within-an-analogy: it took Ancient Greeks just one century to go from copying Egyptian sculpture techniques to near-perfect human anatomy[0]. Where did they go from there? Exaggerated beauty ideals! They mastered realism and then decided to ignore the parts of reality that didn't interest them.
How does that insight translate to input devices? I can't say for sure of course, but given that mouse-clicks have never felt like an obstruction to immersion, I suspect that the most fun gesture-based games might lean a bit less on realism than we expect. For gaming input we want to feel in control of our gaming avatar. So low-latency still is likely to be important, as is "perfect" input detection is important.
However, and this is my main point: we never stated that "perfect" input detection has to be realistic input detection! A lot of game input schemes are more about giving us the feeling of control and mastery of skill than "realism", whatever that means in this context.
So I wouldn't be surprised if gaming will turn out to be a dead end for generic interface innovations as a result, since the interfaces of games will only become more specialized to the purpose of making them engaging. No disrespect to game UX - there is a lot that general interface designers can learn from studying game design, since at its core it is about building aesthetic interactions. But it's not quite focused on solving the same issues.
I would place my long-term bets on immersive computing environments like Dynamicland[1] coming up with truly novel, more generic interfaces that break out of this problem, due to it having more use-cases for generic 3D input. But we'll have to wait and see (or join the people at Dynamicland and try to actively make progress in that department).
