It depends on the frequency of the cutaways and in-jokes. Deadpool is a pretty solid template, as are the two recent Jumanji movies. The Gamers was both low budget and was completely dependent on knowledge of the tropes to enjoy.They kinda tried that with the first D&D movie and did a crap job of it. Using the Deadpool model they could do it a bit better, but not only was this done in The Gamers, it would really only appeal to those who've already played. The goal of the movie (besides being a financial success) is also supposed to draw more people to the game.
I just wouldn't do it as "inhabited avatars" like Jumanji, I don't think it needs a real world frame of reference. Let it inhabit its own world, but play up gaming tropes and break the 4th wall occasionally.