I cannot begin to stress how potentially groundbreaking this technology is. I have always stated, that motion controls for gaming, no matter what tech you used to derive your motion control, was a complete dead end for gaming, unless someone developed a revolutionary method to make it essential for gaming. To date, I have been proven 100% right in this case. Extremely few games have worked well with motion controls. And quite honestly, Milo represents the first true 'killer ap' in the world for the case that motion control may be the future of video games.
The unprecedented potential that Milo represents, right out of the gate, is a complete and total re-invention of the RPG and adventure game genres. Games like Shenmue, Mass Effect, Alpha Protocol, Yakuza, Fallout, Indigo Prophecy, Heavy Rain, Omikron, etc. . . . adventure games and RPGs that heavily depend on social interaction with in-game NPCs to advance in the game, would be completely and forever revolutionized using Project Natal and the Milo API.
What is an even greater portent of things to come for RPGs and adventure games, is the fact that Peter Molyneux and his team at Lionhead Studios, an RPG-centric game studio, are the ones developing the Milo API in the first place. And if that was not awesome enough for you, consider this. At a recent private play thru of Milo, it was revealed to Joystiq, that Lionhead would indeed be including Milo in a real game to see release around the same time as the Project Natal launch. Still no official date on Project Natal's release, however judging by the polished state of Milo, I'd say definitely sometime in the next 12 to 18 months. Putting it firmly sometime within the 2009 - 2010 calender years.