I think P is assuming that these kinds of gadgets will rely for a while on processing done somewhere else closeby in order to shrink them further, sort of the A

I think P is assuming that these kinds of gadgets will rely for a while on processing done somewhere else closeby in order to shrink them further, sort of the Apple Watch crutch. This assumption misses the problem you have with latency - the refresh rate of VR/AR needs to be extremely tight for these objects to really stay in one place when you walk around at even a modest pace. So the limiting factor isn't just processing power and weight, it's power+weight+latency+price that you need to balance, with hard limits on latency and weight.