Joystiq got a hands-off demo of the Hydra in action and seemed to be impressed with the Hydra which instead of a camera uses a "small base station that creates an electromagnetic field with a radius of about six feet" to "see" the two wired controllers. Joystiq also reports that the controller, which is being co-developed by Sixense, will actually have a special bundled version of Portal 2 that will have "new maps and puzzle mechanics built exclusively for Hydra." An example of the new puzzle design: being able to stretch cubes in the game.
Unfortunately that also means the Razer Hydra controller is still a long way off from being released with Joystiq saying that it's now scheduled to come out in early 2012. However the Sixense technology already supports a ton of previously released PC games. You can check out a video showing the controller being used on a boatload of PC games after the jump: