Wouldn't it be better if he was only holding a small 6" long stick, the kinect tracks that, and digitally adds the extended lightsaber? Maybe this was just his step 1. It would minimize the destruction caused in your home from swinging around a 4' stick.
Maybe you could use the wiimote in combination with the physical tracking to get more precise telemetry + precise physical location and AR.
You just described Playstation Move.