Oh man, I'm looking very much forward to F.E.A.R.!! I've played the demo at a friend's house, and wow! Great atmosphere, superb graphics and cool frags! And spooky, spooky shit...that's what I like. And that AI! man, they really screwed me over badly a time or two-three there.
Now the demo is one thing, but I've been reading a hands-on preview by my gaming mag and the shit they describe is just awesome, especially with the little girl in the red dress.
It's like a horror movie with you in the lead, you already get that feeling from the intro in the demo eh. 
Basically their conclusion is: you're stuck between the choices playing on to get to the bottom of the story or shutting down the pc and crawling in a corner shaking. I like that. 
I wish I could scan in parts of the hands-on preview for you Derf, but i don't assume you learned Dutch by now.
As for the breathing...no effect afaik. When your comm device and HUD (health and armor) are flickering it means there's heavy paranormal activity going on tho, if that helps. So you can get ready for the worst.
I'm getting this game, for sure. The MP mode looks kinda primitive, but pff...SP still ownz u. F.E.A.R. for teh win!
