I also completely loved it. Best interface I've used. Also great points about it (and as someone said, the whole jumping close to the camera thing was a result of very good design - I think I actually read somewhere how they came to have it).
As for why it wasn't used more - I suspect that for AG developers it's not a cheap system. You need full 3D, which is of course not what AGs tend to use (and so much more expensive than the 2Ds and 2,5Ds that do use) and for full 3D you need a very different level of detail and graphics in the modern day for it to have an acceptable level of graphic quality. That's really expensive. I suspect that if there were high profile AGs, and they had the kind of budgets other games do, this interface would be utilized more.
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