Frank Taylor at the Google Earth Blog has posted a video demonstrating a new layer in Google Earth (v 4.2 required). The layer essentially adds portals to high resolution images on to the map and allows for modal interaction with the image. The interaction starts with a sweep down to the geolocated image which is then aligned with the surrounding 3d space. You can then navigate into the image which is refined like the standard tiling approach seen in mapping sites giving you access to the full gigapixel experience.
Here you can see the image (of Pittsburgh) situated in position against its subject.
Selecting the interaction mode for the image then repositions the camera so that the image is aligned with the 3d context:
Zooming in, we can then see the great detail in the image (note the full image displayed in the top right hand corner which indicates which part of the image we are now viewing).
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