I know that applying this transformation can cause motion sickness for some people. I wonder why this happens, since the transform is meant to more closely match how we perceive things in real life?
Because people perceive motion not only with eyes, but also with the vestibular system. When these signals mismatch, some people feel sick.
Yes, just like VR, people will feel sick because what their eyes see and what their body feel is different, brain can't match them together.