Heh, I actually think this is really cool.
Imagine playing a medieval game and going into a dungeon and suddenly having a musty smell of soil fill the room... leave the dungeon and get a scent of ozone (like an air purifier) or grass. Walk past a farm and get the scent of hay (or if you're really hardcore, manure
). Have a fire ball whiz by your head and get a scent of sulfur.
This could be very very cool if done properly.