Potentially interested. It sounds like it's basically SAO and other "trapped in MMO" anime, but without real death--however, the idea of death causing such intense feedback that it can mentally break people, producing these "Wretches," kind of reminds me of Dark Souls and the Hollowing process--players try to clear the game, only to die over and over and over, re-living the shock of death again and again, until finally they break and go mad. Have you thought of using that aspect of it to turn the setting a bit darker and replace the permanent death aspect that most MMO-Trap stories use? It'd be a good way to excuse the complaint that "main characters obviously can't die" but at the same time there is still tension and stakes that make players want to avoid death at all costs.

Another question I have is about the origin of the game. In SAO (you'll probably be sick to death of hearing that used as a reference, but it's what more folks will probably be familiar with, or else .hack//) there's a bit of buildup beforehand as to how all these people actually became trapped in the game, how it was legitimately marketed but then the sudden reveal of the trap caused widespread panic both in and outside the game world. You mention that the game is being Beta Tested--did whatever huge shady corporation developed it send out thousands of invites, or are there only a few Players in the world compared to all the NPCs? How has information about this been kept from the outside world--why haven't the police, or the parents, or doctors or anyone else ripped out the wires or whatever is connecting the players to the game? How are their real bodies being kept alive?

I could go for either 1x1 or a small-group setting, whichever you end up deciding on.