I'd rather see a VR suit/controller that, when shot in a certain limb, makes that limb disfunctional until healed. That would give fragmentation ammunition ,like shotguns and frag grenades a more tactical function. And it gives proper use to the single handed weapons, since a disfunctional hand/arm makes using large weapons like machine guns and snipers unuseable.
The idea to transfer digital damage into real-life pain does have its potential tho. I like the idea just so you know what kind of damage you inflict upon your enemy when you recieve some yourself. I am worried tho that this will lead to a situation where only masochists and sado-masochists will continue playing and the rest will realize the pain and destruction combat, and specifically war, brings with it and perhaps start working on a better world...
An idealist can dream, can he?