This is fascinating. I did a bit of work on this as part of my masters. Originally it was as the byproduct of an assignment designed to find a an actual use for biofeedback in commercial gaming but it became a crossover piece where we investigated using the biofeedback as both a control mechanism AND a psychological loop to increase the challenges presented.

One of the significant difficulties we faced was actually getting players comfortable with bio-feedback devices. Both their implications/sci-fi history and the nature of the devices themselves are somewhat sinister so we found that simple interaction with device could produce an emotional response that was completely separate from the game itself!