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EEG in video games

Can EEG or neurofeedback be used to create interesting and engaging videogames?

I'd like to discuss the possibility of integrating brain waves into video games. I should mention that I'm not an expert game developer, I'm a researcher working on a wireless EEG device with a few other scientists, designers, programmers and engineers (here it is) so I apologize if I'm going into too much or too little detail. I would like to get your opinions on the potential compatibility of EEG and video games.
It's not an entirely new thing, but there are now new tools for making things easier: Some EEG headbands can give you access to your raw brain wave signal. This data can be filtered (either by the EEG device or the host system), to get rid of artifacts caused by eye or head movements. A built-in accelerometer helps to indicate when major movements are taking place. The signal can then be processed: You can look at the power of each frequency or frequency band by running an FFT and give the player live feedback of some kind. Certain frequency bands are associated with certain states of mind: E.g. the alpha frequency band (8-12Hz) is associated with a relaxed state of mind, the beta band (12.5-30Hz) is associated with a focused mind.
Now there are several different ways in which you could make use of this kind of information, i.e. provide feedback. You could use it to manipulate features of your character, or the environment.
Somewhat intuitive options would be flying or floating or slowing down time when relaxed.
One example which has already been investigated a little is rewarding a relaxed state of mind in first person shooters, during stressful situations. And just to be clear on this, I personally do not particularly like this approach. There is not much research on how the reinforcement of a relaxed state while shooting objects/creatures in video games influences your behaviour while handling weapons in real life... and for now the possibility remains that this can go in a horribly wrong direction, even if it's just for a certain group of people.
However, stressful situations aren't just part of shooters, they can be wherever the player has a limited amount of time, in puzzle games, races etc. And with the right training, this kind of neurofeedback might help us handle stressful situations in our daily lives better.
On the other hand you could train players to maintain a high focus during longer periods of tme, reducing their tendency to be distracted or become tired - this is the kind of approach that has already been used for treatment of disorders like ADD.
I once read about a shooter in which more enemies (zombies, if I remember correctly) were created when the player was getting too relaxed - but I can't find the details online anymore, has anyone heard of this project?
Another option is monitoring your opponent's state of mind. Seeing their relaxation fade as you are doing great could add quite some fun.
Also, you could have the colours or the soundscape/music change depending on your state of mind.
I'd be interested in your feedback on this!

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