not true, they could just have the Goggles measure your muscles movements and monitor electric impulses in your brain remotely using sensory pads and what do you mean by realism? .hack is pretty realistic compared to most animes, you dont have martial artists throwing fire balls or green people regrowing limbs, or the opponent magically being vanquished by the power of love or something, in fact, all the phenomena in Dot Hack CAN be answered scientifically
Ok it is a cartoon, no anime cartoons or regular cartoons I know of are all realistic. This is really just common sense here, its not that hard to think of a solution to your question. It WOULD be really boring to have to watch unmoving mouths and stuff. Thats really all to say.