I've not worked on my WIP for a while now.
I keep putting it off, because I'm not too sure whether the mix between reality & game world works.

The plot is this (some of you may be a bit familiar with it already):

Young woman is seriosly into computer games. She gets the latest wizz bang MMORPG & starts playing the game.

In the game she teams up with several different characters (other players) who form a party and go around having adventures etc.

One of the characters however turns out to be a physco (unbeknown to the others) and starts serial killing them when they make mistakes in the game & cause them to fail quests / take damage.

The story will tell how the pyscho manages to track the other players down through the use of technology (internet tracking / IP addresses / googling etc) and what he does to the players as revenge for their in game cock ups.

Now then, initially I had this ground breaking idea that I would switch between real-life action and action taking place in the game. I was going to write the game sections so as they would be like a fantasy novel. The reader would understand that it was a game, but I didn't want to have loads of sentences saying things like...

and then, in the game, a giant graphic of a dragon swooped on Alyson's character and took down her health.

I would write it like...

Alyson threw herself to the ground, but her attempt to avoid the dragon's razor like tallons was in veign. (okay this is cliche but its an example)

My thoughts are though - would the reader be interested to read the fantasy bits if they know its just a game? The fantasy sections would read like a story in their own right, leading up to the point where the remaining members of the party take on the evil overlord type.

Or should I just keep it simple and explain the events in the game and stick to the majority of the novel taking place in the real world?

Note that this isn't a virtual reality game. It is just played by sitting at a computer. It is in the present (not tense, but present as in 2005).

I think I need to clarify this a bit more, because I'm still not entirely sure that the responses I've had so far are based on enough understanding of what I suggest:

The reader will know for certain which parts of the story are in a game, and which are in the real world. The real world is this world, but the game sections will be in a fantasy section.

There will be chapter breaks to identify the switch between reality and the game. It will go something along the lines of:

Alyson sat at her computer & loaded up the game. Her character appeared in her rented room at the inn. Her magic points had been fully regenerated overnight.

---chapter break---

Alysia walked out of her room and down the stairs to the bar. The establishment was filled with other travellers who were either trying to buy rooms to rest for the night, or grab some food and drink to recover their wary souls. She looked around the room searching for the familiar faces of her guild. She was a little late, but knew that Izaar wouldn't allow the others to head out into the forest without her. Besides, they needed her key to open the gate to the....

etc etc etc.
This isn't actual text from the novel, btw. So I dont need this critiquing. It's just to give you a flavour for how things will appear.

Now then, what will happen is that that from time to time, somebody who is playing the game will screw up. I was also planning on putting quite a bit of conflict between the characters in the game as well. They will be bickering about stuff, but the reader will be able to understand that its the real people falling out over how they should tackle a particular monster or something.

One of my ideas is that the group will be battering away at some kind of monster (maybe a dragon or something) and they will desparately need 1 of the characters to cast a spell to shield the fighters. They will have discussed their tactics before the fight & after starting the battle, said character will have failed to perform their part.

There may be a cut out to real life, where said character has to rush to the toilet, or their internet connection is cut, or there is some reason or other for this.

Anyway, after the battle, one of the characters will obviously be very upset about the said character not making the grade. There will be a lot of falling out etc in the game.

Then there will be another cut to real life where we find out how the physco guy tracks down by using technology etc the identity of the real life version of the game character who screwed up. They will then murder the character in a method that is related to the events that took place in game. For example, if the character who screwed up failed to raise a shield, they could be locked in a dungeon with no chances of escape. Their is an abundance of food and water, but it is locked behind bars, which the physco explains is how a shield should be formed.

Okay, I've probably made a really bad job of explaining this. But I just really wonder how much interest the ingame parts of the story would hold for the reader.

It's definitely more like option two than option one, but the difference is that gamers unabashedly say things like "I desperately tried to dodge, but I guess my Evasion wasn't high enough, because that sucker carved me apart like a Thanksgiving turkey."

If you're interested in learning more about gamers and how they see the world, try some of Planet Fargo at Gamespy. Actually, I was thinking of this article, but I saw the newer one and thought it was a blast, so I linked it instead even though it is a bit off topic.