I got my 60fps webcam today, and yes it works ALOT better. Not quite perfect, but it's a massive improvement.
I loaded up Quake 2 with the Privacy View turned on, to simulate foveated rendering. Actually it works pretty well. 80% of the time, I can't even see the blurring, and mostly when I do notice it, it's just a bit of vignetting around the periphery of my vision. I had my 13-year-old son try it... its pretty neat to watch from the side, so you can see how much blurring is happening that he can't even see.
Playing with the settings a bit more, and I can see that it works best if I make the clear viewing circle close to the maximum size... maybe 30% of the total screen area. The bigger the circle is, the more forgiving it is for small bits of latency or inaccurate tracking.
True foveated rendering should improve performance, but I'm just simulating it, and there's quite a performance cost. Quake 2 says it's still rendering 144fps, but the Privacy View seems to lock it down to about 60, plus some some additional stutters.
I'm now convinced that foveated rendering for desktop gaming is possible. For foveated rendering to work so well that you can't notice it, I think you'd need a bit faster web cam. Based on how close 60fps is, I expect 90-120fps would be enough. Also, eye tracking needs to be a bit more accurate than what I'm getting, and calibration needs to work better. Maybe they can improve these through software, or maybe you really need dedicated eye-tracking hardware. But there's definitely a path to making it work.
As I mentioned before, you'd also need to make sure that your games are not doing any deferred rendering. Quake 2 is a perfect test game, as there's no post-processing or anything.