Do you never entertain guests with your home theater system?
I believe you when you say that it could replace the experience for yourself, but, at least for me, hosting with my home theater is the main driver for improving it.
You nailed it. It's just not really a social experience OOTB. There are apps you can use to place multiple viewers in the same virtual space (similar to the ones on the quest), but it's just not "social" in the way that a real theater is and to do that locally would cost a fortune and be awkward and pointless.
That said, I entertain less than I watch movies alone. It's probably not worth giving up an entire room in my house for the handful of times per year that I actually entertain. My home theater is mostly just about my quest for perfection when enjoying the films that I love. If/when I can get that out of a headset... cool.
Ideally it will have real Dolby Vision/Atmos and all of the other things high end home theater equipment is expected to have, and right now the AVP doesn't. Between the reflection issues, lack of Dolby Vision, etc it's only like 80% of the way there.
I have a 120" ALR projection screen, 4K UST projector, modular semi-circular couch that seats 12 and a decent sound system. I host ramen + movie nights where I make some ramen from scratch and we watch a sci-fi movie together. I also do video game nights where people come over to game on the big screen.
Some people care about film and it's a hobby for them, some people don't. I'm sure for the people who care and their groups, it's more than just watching TV.
I believe you when you say that it could replace the experience for yourself, but, at least for me, hosting with my home theater is the main driver for improving it.