Immersive Media, who I gather are also responsible for a lot of the Google Streetview images, have taken the 'interactive panorama' idea a little further than most, and introduced 'Immersive Video'. Sound interesting? Indeed it is.
What is it?
Well it's a Flash Video, but with an extra interactive element - you can move the viewpoint around. So you're not confined to following the camera's viewpoint, but can focus on whatever you choose as the action progresses around you.
How does it work?
Well actually, the cornerstone of this idea is getting a camera that can record a 360 degree image. You can see what this fancy camera looks like on Immersive Media's blog.
Presumably this camera stitches all of its images together and gives you an escher-esque video output on a flat plane. All you've got to worry about then is getting flash to chop up the output and paste it as a texture for the inside of a 3D object.
Of course, the final output is pretty fantastic from a 'woo that's-never-been-done-before' point of view.
Good points / bad points
Technically I love this idea, and the output is certainly pretty impressive. But practically, how good is it?
It reminds me very much of a couple of Computer games (Halo or Haze) where cutscenes are a strange mix of free-look capability and cinematic action. You can look at whatever you want, but you're never in as much control as you'd like, and there's a good chance you're going to miss something important because you're looking the wrong way. That's one advantage of a restricted view - making you watch what you're supposed to be watching.
Personally, I think there should be two options - free-look and directed viewports. Toggle between the options - have the action directed for you, or look for yourself. At least then you know you'll not miss something important. Heck, you could even get some sort of flickr style community viewport direction stuff going on...