Here's a short comparison of three methods of aligning an image with the Google Earth scenery.
A while ago I attempted to create an overlay of the Abbey Road Studios live feed of the camera they have pointed at that famous zebra crossing. I plastered the image on a GroundOverlay and set the camera position to give a reasonable rendition of the crossing area, though of course most of the image appears distorted.
Next I tried a ScreenOverlay. Careful viewpoint positioning gives a fairly good result.
Clearly the PhotoOverlay gives the best fit (and I'm sure I could have done better with a bit more time), but despite having the positioning controls built into GE it is still quite a tricky business getting things aligned. When you adjust lat and long, the altitude relative to sea level remains constant, which means that the altitude above ground level changes as you move about. This happens regardless of the altitude reference type selected in the box. I'd like to see altitude relative to the ground stay constant, if that is the reference I am using.
Just to round things off, I couldn't resist placing a PhotoOverlay of the album cover too.