Virtual Reality technologies are slated to transform the practice of physical rehabilitation and the potential benefits have only started to be explored. We present in this paper a direct motion demonstration approach for allowing therapists to intuitively create and edit customized exercises and therapy programs that are responsive to the needs of their patients. We propose adaptive exercise models, motion processing algorithms, and delivery techniques designed to achieve exercises that effectively respond to physical limitations and recovery rates of individual patients. Remote networked solutions are also presented for allowing therapists and patients to intuitively share their motions during real-time collaborative therapy sessions. Our solutions have been implemented as a low-cost portable system based on a Kinect sensor, and as a high-end virtual reality system providing full-scale immersion. We analyze and discuss our methods and systems in light of feedback received from therapists.