Nothing new, I've heard something like this before. Look up 'virtual haircut'.
Still, it's neat. It didn't have a 3D effect on my 4.1 speakers, though. Probably with headphones or 5.1 it would be amazing.
Not that harder, getting louder and softer depending on where they say they are. I read about it, something with the brain. Funny, I always thought it had to do with your stomach.