To break the images, you have to punch (even slightly) them while holding the trigger button.
Does the images break correctly ?
Sorry, for the late answer as I was busy recently.
So, the level selection should looks like this : https://gfycat.com/firstgiantivorybackedwoodswallow
Are you playing through the Oculus App or SteamVR ?
The game was developed using SteamVR, so it might not work properly if you are using the Oculus API.