Just watched a really interesting talk from Chris Dede held at the Berkman Center for Internet & Society that brought me back to a topic I've written a little about before.
Conceptually, it seems pretty clear that the science of augmented reality is still stuck on producing reality inside the computer. Instead, I think the focus should be creating new realities through the computer, paralleling quasi-teleportation.
Here's how it would work:
Take two conference rooms. In both rooms, one wall is a giant Ultra-HD screen linked to the other room via fiber-optic cable and an 8K camera, or maybe a grouping of these cameras depending on the dimensions of the room.
Walking in, nothing would appear different about the room, other than the fact that one wall is pitch black. Then it turns on. This fourth wall is now a "magic-mirror", linking the other room to your room and vice versa. Essentially, both rooms have now created a third room that they collectively share.
This isn't video-conferencing. This isn't virtual reality, and while the equipment I'm talking about is still experimental and available in limited quantities, Moore's law – or perhaps more accurately the demands of consumerism – will say otherwise.
The "killer-app" in this instance would probably be distance learning. A system like this would enable a lecturer in a far off land the availability of teaching an evening course to a class of students across the globe while maintaining the same classroom structure. The essential difference is that the experience for both parties sitting behind the camera/screen would be in such high-fidelity that it becomes truly indistinguishable from reality.
Just give it 10-20 years ;)