I prefer to play in first person. When moving toward the edge of a cliff to snipe some unsuspecting enemy below with a bow, it would be nice to make sure my next step is not going to leave me standing beside them... or worse.
It's also an immersion breaker.
Niamh is an archer and I always look through her eyes when we are in combat and I can honestly say she has never fallen off of a cliff, or indeed anything as a result of not being able to see her feet.
I would suggest it's an immersion breaker for you - because it's not an immersion for everyone.
Also:
The position of your hands/arms is different in 1P and 3P all the time, just get used to it, it's probably me, but I just don't see why it's that big a deal...