The new photo viewing mode built into Google Earth 4.2 is best illustrated to date by the layer under Featured Content called Gigapxl Photos (see article or the video below). But, Google also introduced a mechanism for adding your photos into the Photo Viewer through the menu Add->Photos… (here is a brief tutorial from Google on how to do this). Underlying this new mode is a new KML 2.2 tag called <PhotoOverlay>. Google has just released detailed documentation on how to use the new <PhotoOverlay> tag and take full advantage of the features. Also added to the documentation is the interesting new <Camera> tag.
Here is a video showing the new Gigapxl Photos layer:
I also liked the innovative application of the PhotoOverlay someone developed at the Google Earth Community which used a transparent image showing the view of GE as if you were inside a helicopter. Story on the new KML documentation via Google’s Using Google Earth blog.