To say it's "faked" is a loaded statement, just say it's a demonstration of how the concept would improve usability. Perhaps it's real, but I didn't get the excitement of a demo of a real, working prototype.
Seems like I'm not alone in my scepticism:
You should be aware that MS is not demonstrating any technology here. They're using existing hardware (IR camera and projector) to demonstrate what low-latency would be like for the user.
Also, they're not pointing any metaphorical fingers in this video. I was assuming the hardware is introducing the lag, but it might be the software, and MS may be looking at reducing that. If it's just a software problem, you wouldn't need a new phone and/or tablet to get the fix.
Although it might just be that Neebat is as disillusioned and jaundiced as I am.
:/