I don't have scientific knowledged. However, I can say that as an audience member, when stage "fog" has blown my way, I get an irritated feeling at the back of my throat. So I see no reason why audiences should be made uncomfortable when there are so many alternative methods to make compelling theater!
Speaking of compelling theatrivcal effects, I've been heartened to read the rave reviews by theater (not music) critics in the Washington Post and NY Times about Baz Luhrmann's La Boheme on Broadway. If nothing else, he's providing presumably well-paid employement to a sizable group of young opera singers (with double and triple casting). And it sounds like a combination of good singing, good acting, and good direction and production.
I'd love to hear from anyone who gets the chance to see it.
Peggy
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