I think it's a bit early to say "the metaverse has failed". First, you have to define what failure and success looks like in terms of a metaverse. Do we have the metaverse from Snowcrash or Ready Player One? No, of course not. But do remember that technology tends to get built as a long series of incremental stepping stones leading towards a final vision. The challenge is always going to be in execution and also realizing along the way that some of the ideas posed by sci-fi writers are just not feasible in practice.
Do I wish everyone wore full body mocap suits for full body tracking? Sure, that'd be awesome for self expression in VR, but in practice, are people actually going to spend the money buying a mocap suit and putting it on every time they hop into a VR session? Probably not. With every added hardware peripheral, you also get new problems to wrangle: how do you wash the mocap suit without damaging the hardware? How do you support different sizes for different body types? How do you properly calibrate it to various physiologies? And if you support full body mocap suits in your content, how does your content support players who don't have the hardware prereqs? I personally think the metahumans from UE5 are fantastic, and Epic's mocap solutions with live link and integration with existing mocap suits are state of the art, but rendering metahumans in VR on a mobile processor is always going to be a heavy lift and content creators would need to make sacrifices to other parts of the scene. It's worth checking out the meta codec avatars though - I think it's at least on parity with UE5 metahumans, if not better.
I think it's also worth noting how big of a task it is to build VR hardware devices, a content platform, a player ecosystem, and building on the tech to create the next gen hardware at an affordable price point. Everything just has to work perfectly. I'm probably a bit biased, but I think the Quest3 VR headsets are the absolute best in the world and outperform all other headsets across the board. Getting to this stage is always going to cost enormous engineering talent and effort, and there are always going to be small stumbles along the pioneering path as we chart new unexplored territory. It's expected. But we adapt, overcome, and keep building the future, a little wiser than we were yesterday.