Yes, Papa Sangre uses real-time binaural 3D sound, www.papasangre.com. I'm not aware of any other real-time binaural solutions. I'd like to know too if there's more. OpenAL and other out of box 3D sound engines are stereo, not binaural.
What do you mean by general purpose HRTF? Do you mean that the HRTF should match the player's head somehow? I haven't played Papa Sangre so I don't really know how well it works.
Sorry for the late responses. Yes, I'd imagine it should work better. In my case I don't tend to hear frontal direction in most binaural recordings. How would you create such a custom HRTF? Measuring somehow or should it be manually calibrated? Seems like a pretty interesting problem, I might do some experiments with this some day.
Exactly, many people cannot differentiate front/back and up/down with general purpose HRTF, something that is much better with a custom HRTF.
For basic experiments, put 2 small microphones into your ear canals, hit record, then go for a walk. The result will blow you away :-)
To record your custom HRTF, get an anechoic chamber, put 2 small microphones into your ear canals, then record impulse responses from all directions. Not quite as simple.