Camera in Eye mode for FPS gaming

A little question, BTW, when you go for a material with "Special :collision", does this bypass the "Collisions bounds" setting like capsule, box or cone ? Does it force physics calculation to be mesh accurate like Triangle Mesh in the BGE ?

Yes. It does. Probably not the most obvious thing. We'll clarify these questions in our Documentation.
But again if you will turn on the Detect coliisions flag in object it should override "Special Collision" setup in the material. (Which now causes a bug as we have dicovered)