Whats the point of neo touching the miror in M1

The mirror is basically a part of the matrix just like the room they are in and the bodies they are using. Neo and the people surrounding him are not in the same physical location, ergo the tracer. Since the red pill is interupting his signals to and from the matrix which is his brain signals recieving and sending input to the Matrix, his distortion of it bends and warps, similar to the corruption of a computer program or image. The difference is that he is alive and his panic engenders a crash in the interaction he is getting from the matrix. This will result in either his death by cardiac arrest or initial release if they find him. deeeeeeeeeep.

This mirror explanation sounds great to me. I dont think its put there just for eye candy. There is nothing in the first movie that I can recall that is put there just for fun, everything has a purpose:

Neo dodging bullets: very cool, but shows how he can bend the rule of the Matrix

Shootout in the lobby of the building: extra, extra cool, but shows how Neo and Trinity can now just brush aside regular armed humans.
And lets face it, every mirror scene in every movie is put there to ask the same questions about identity and self-awareness, internal conflict, etc. Its the same thing with this scene.

Also, the mirror idea is out of "Alice in Wonderland", where Morpheus pulls a lot of ideas and lines from. "Through the Looking Glass and What Alice Found There" is another one, and the source of the Alice reference mirror.