Here's a short summary on how it works:

The KMZ contains a network link to an HTTP server. When the view stops, GE makes a request to the server and sends the coordinates of the area on the screen. The request is handled by a PHP script which calculates the middle point of the screen and the approximate zoom level. Then it sends back a KML file with 25 transparent image overlays around the middle point. These image overlays are links to map "tiles" on the Google Maps server with the tile coordinates and the zoom level inserted. When GE has received the KML file it loads these image overlays and they appear on the map.

The network link location in the KMZ looks like this
...mapover.php?ZMIN=0&ZMAX=14&TRANS=80
and you can influence the script by changing the parameters:
ZMIN=... minimum zoom level (0 is most detailed)
ZMAX=... maximum zoom level
TRANS=.. transparency level (two hex digits, 00 is invisible, ff is opaque)