I see what your saying and yes, that would be a lot of work,
But I don't think any of that would be necessary, couldn't they just create a new camera that sits directly in front of the characters head, so that in the periphery of your vision you could see parts of your body, no extra assets would be required, just adjust the placement of the camera without hiding the graphics? I don't know if that is possible. but I don't see why not
It wouldn't have the same effect as skyrim or other fps games though, it would be POV.
another cool thing, when your riding on your mount, wouldn't it be cool to see the chocobo or couerl or goodbue or flying eye or behemoth or so on and so on right underneath you, so its more like your actually sitting on your mount and not just floating around above nothing.
haha could be just me but I'd like that.