For the last few days I've been experimenting in Google Earth 4.2beta with the KML2.2 PhotoOverlay element. I'll post some of the initial examples in the next few days, but I'll start with this evening's results.
A while ago Smithee over at Digital Urban came up with an excellent method of displaying 360x180 degree panoramic spheres in GE. I wondered what would happen if I tried to combine his panoramic spheres with the new PhotoOverlay element.
First download his Google Earth Trafalgar Square panorama and view it in GE. Then download this viewer photooverlay file, which has been set up with the same coordinates to place you at the centre of the sphere.
The results are a little disappointing, mainly because the implementation of spherical images in GE seems to be buggy. The image often moves jerkily and flips upside down when you stray too far from the neutral position. However, it does add an extra method of navigating the sphere and the ability to zoom in with the mouse wheel. I still much prefer viewing the spheres with a SpaceNavigator, but for those that don't have one this method gives an extra option.