Hope you're right. Personally, I imagine if I were to play an intensely violent, photo realistic game, I'd feel physically nauseous. And I think I'd be more than a bit disturbed if those kinds of games became popular.

I still think it will take considerably more to break that sense of detachment than the senses of vision and sound. Perhaps once we can smell and touch as though things were real, then true desensitization can occur. Not to mention the biggest psychological barrier that soldiers have during training to becoming desensitized is that they know a cardboard cut-out isn't real, they know that they're doing this to train to kill people as opposed to ACTUALLY killing them (quite a big difference). Motive makes a big difference to why we do things and how they hit us emotionally. Perhaps rather soldiers should be sent out into a training yard, told they have live ammo in their guns (when they don't), and be told to shoot to kill their opponents in the training scenario. I imagine this has all sorts of legal reasons and other emotional impacts I'm leaving out of the equation. But the point is, the only way your likely to inure someone to killing is to make them believe they actually are.

Apart from people buying the games, I would imagine the ESRB would revise their ratings system if the violence depicted in a videogame was convincingly realistic and evocative of real violence. After all, 'gore porn' movies get R ratings, so I would imagine a game that is sufficiently realistic to cause psychological harm to players would probably evoke at least some amount of the same effect on ESRB reviewers, who I can but hope would label the game AO, effectively curtailing the retail possibilities of said title. After all, there are already games that have had to be toned down in order to avoid said rating.

At least, that would be the logical conclusion I would draw from what I've seen so far and the extreme scenario you present.

@Christopher: I don't think we need smell and touch. One of the major differences between real life and FPSs is the impact of hits on the target. If, in a game, I shoot an enemy in the leg or arm, the enemy keeps going with little more than a grunt and a stagger, if that. In real life, someone getting shot, even in 'non-lethal' locations like the extremities, is more than likely to fall over, let out a cry of distress, pain, surprise, or any combination of the three. Also, there is no such thing as incapacitating or almost lethal hits in games. You don't see or hear a 3D model writhing on the ground, calling for help, a medic, or mercy, whereas someone who is fatally wounded but not dead in real life will probably be struggling, and showing visible signs of distress, if they are still conscious at all.

If we're going to go with 'hyper-realistic', I'm assuming we're not just talking about realistic faces, animations, and skin textures, but also realistic behaviours and reactions to getting hit. That's one of the reasons why I'm surprised a bigger deal hasn't been made of Dead Space's location-sensitive targetting. You would think FPS developers would have been taking notes and applying that to their future projects.

I think this very much parallels the theory of the uncanny valley. As FPSs approach more and more realism, with bots that react realistically to getting hit with evident and realistic signs of distress, players and observers may very well be increasingly put off from playing them. Who knows, perhaps such a game could be use to educate people about what war and violence are really like, as opposed to the way they are depicted in movies and traditional games. I'm thinking that would be an interesting Educational Game / Game for Change / Mod to develop.

People will use technology to create very realistic murder/torture simulators much more graphic than most of us can imagine - no one will be able to stop this. People will buy it, but it will be a niche audience, similar to the audience for faux snuff films like "Flower of Flesh and Blood".

"But if games evolve to the point that victims die realistically, most players will back down and simply refuse to buy, let alone play such a game."

To the extent that it is a problem, it's a self-correcting one. I have no problem with the idea of a game "beyond the pale" existing. I also have no problem not buying it and advising others to do the same. The market will decide far better than any legislator or game publisher.

Good game designers will make this aversion to killing a choice-point, with consequences either way. Realism won't come from whether the in-game would-be terrorist screams as he bleeds... it comes from how the player deals with either having killed him up-close and personal, or having spared him then watching the towers fall. No-win situation? Sometimes. THAT is reality, and if you're looking for emotional impact that lasts longer than an adrenaline-surge, THAT is where you will find it.

Madworld pushed this limit for me. It didn't need realistic graphics, the brutality was so savage I, after 20 years, finally put up my wall. The issue could be that the violence isn't even real, it's beyond real. It depicts death and beyond. I mean I imagine Call of Duty 4 and WaW capture that intensity of shooting and seeing death. I don't know where people's limits are but judging by some journalists we're a ways from that common "wall" of acceptance.
The only thing is that I feel you could shoot a guy in a game and know he has no real history, family, etc. You can pretend for the story's sake but in the end that palpable emotion isn't there.

@Kumar
There is considerably more to firing a gun than sight and sound. The gun is cold in your hands, warm perhaps if it's been in the sun, it has a feeling of weight and gravity when holding you can never eel while holding a controller. There's the kickback of the gun, there's that acrid smell of burning gunpowder you can almost taste. There's the light pain in your shoulder or arms because of the kickback. If you were in combat there would be the rough feel of your garments, the feel of the ground your standing on, the texture of the wall your leaning against. The adrenaline pumping through you and the lack of visibility would take whatever your shooting at out of that crystal focus that a TV screen gives. There's the smell of sweat and blood, your own and your friends. Beat someone to death close up and there's the feel of their warm blood splattering across your face, that sickly sweet taste and smell of blood that lands on you. If someone's running from you or trying to break away, there's the feel of their futile struggle, the tight rough smell of fear, the pain as they lash out...need I continue.

There's considerably more to violence than seeing someone fall to the ground ant then scream and writhe in pain, if anything this is often how a spectator would describe combat, in a very non-visceral way. Two senses are not enough to break that sense of disbelief as we rely on considerably more sensory input to dictate reality. If you cannot taste an orange yet know that you enjoy oranges, then eat them in game repeatedly, seeing the orange's bright hues and hearing the sound of it's skin breaking under your (virtual) teeth, will you actually ever get sick of eating oranges in real life? I doubt it, without becoming inured to the taste and texture and smell an orange is quite different in game to real life.

While the orange example is an extreme, it showcases what I'm talking about. The important factor in desensitisation is that the triggers are the same. There's a big enough difference when you add the other 3 senses that the action triggers are considerably different, because the scenario is different the emotions and senses triggered by the event are different and because of this the event is not associated with whatever you have become desensitised to, and you will feel the full emotional impact of what ever you're doing.