Again, given the popularity of videogame franchises ranging from Mortal Kombat to Grand Theft Auto, there definitely is a huge market for video games that involve playing the bad guy (or at least, an anti-hero) and killing lots of people. I personally have probably killed over 500 cops/lawmen in the GTA and Red Dead Redemption franchises alone. Would potential players be turned off if the violence was more realistic? Doubt it. Would governments want to restrict or ban such video games? Probably. I have no doubts that if a holodeck existed, right after the sex fantasies the next thing it would be used for would be shoot-em-ups, including those of real people.
There's two points here though. First there's the question of whether violence could ever get so realistic to skeeve people out. I think this is plausible - certainly while some people enjoy gory horror movies, not everyone enjoys them after all.
But the second point is there's a difference between fictionally murdering someone who's a rando versus someone you know. I never, ever feel rage while playing a computer game unless it's literal rage with the game related to fighting the controls/camera or repeated crashes. Or I guess if it's an incredibly hard boss fight I have tried a dozen times to get through, but that's anger at the game for being stupidly hard, not the antagonist. The actual process of killing something isn't really cathartic though - I don't feel anything. Get a checkbox, collect some XP, and move to something more interesting like plot and character development.