This isn't necessarily awful. Having a known baseline hardware (even if not quite state of the art) can really help optimization efforts. I'm thinking of the gaming consoles, which are all behind a modern PC in terms of performance, but have really quite good graphics and performance as it's so tuned.
A big part of that is the different architecture of consoles though - the graphics and CPU are highly integrated and share RAM so you don't have to do everything over PCI.
This is almost certainly based on an Android phone so I expect it to have the same performance limitations as those.
You're assuming we need photo realistic games to make VR worthwhile. This isn't true of games in general so why would it be true of VR?
Look at consoles like the Wii/Switch/Gameboy and how well they did. Gameplay is what makes a great game and VR gives you a whole new set of gameplay tools.
The first iPhone and iPad had very different types of games to mainstream consoles but those games were tailored to that type of experience - Angry Birds would have been a pretty dull console game but the touch input made it fun. Pokemon go couldn't even have worked as a console game.
VR is about a new way to experience and interact with a game (it's also awesome how they have standardised the touch controller so that can be properly explored).
Now it's up to developers to experiment and make games people love with this new set of tools.
