Eagle Flight uses it, but it is a beak instead of a nose.

Like with everything, it would cause an uproar in the game world unless it were controllable. I wonder if it would also require sacrificing some usable pixels? If virtual noses take off, I can see video games being designed around them, but it’s possible that integrating one into existing games is harder. Games have a development lead time measured in years so fundamental changes take a while to integrate.