PSEye was really just the first version of the tech tree that Kinect is on. We're basically buying 286s and wanting to run Crysis on them, and then complaining when it doesn't work. Currently Kinect works frame-by-frame, for each frame, we determine the players, work out their body parts, and attach a skeleton to it. Each frame is independent. That's why you get strange results sometimes, where your skeleton will jump around and do things not physically possible. The fact that it works at all is magical. We hand the algorithm a pixel and the surrounding pixels, and it returns whether it's a player and which body part that pixel belongs to (simplified a little, but reasonably accurate).I bought PSEye (Eye of Judgement) expecting great things. I had wised up come Move and held off buying until there was something I really wanted, which hasn't happened yet.
Possible future enhancements would be adding a time dependency, ie, use previous frames to determine if the current skeleton is accurate. The human body can only move so fast, so if the skeleton has assumed a pose that it couldn't have gotten into in that time frame, do some more processing. Another enhancement would be modelling the skeletal joints, so that the skeleton could never get into a position that is impossible for the body to achieve (Like your knees bending backwards etc)
Some of these could work out and make the system a lot better, some might not give enough benefit for the processing cost. Only time will tell.