KML 2.2 beta looks like it contains the ability to view spherical panoramas in Google Earth:
The element allows you to geographically locate a photograph on the Earth and to specify the placement and orientation of the Camera that views this PhotoOverlay. The PhotoOverlay can be a simple 2D rectangle, a partial or full cylinder, or a sphere (for spherical panoramas). The overlay is placed at the specified location and oriented toward the Camera.
Because is derived from , it can contain one of the two elements derived from —either or . The Camera (or LookAt) specifies a viewpoint and a viewing direction (also referred to as a view vector). The PhotoOverlay is positioned in relation to the viewpoint. Specifically, the plane of a 2D rectangular image is orthogonal (“at right angles to”) the view vector. The normal of this plane—that is, its front, which is the part with the photo—is oriented toward the viewpoint.
See here for full details
Looks like our Google Earth Panorama viewer (pictured above) may of had its day. Soon as we get a working version we will put up more details and a movie.
Thanks go to Karl for emailing us the tip…