Recently I posted on the use of Virtual Earth by iFly.com to provide its customers with easy access to compelling, three-dimensional flight tracking imagery on its Web site. As I mentioned in that post, while this is a commercial implementation of Virtual Earth, it doesn't take a whole of of imagination to see how our military, or the FAA even, might leverage the Virtual Earth 3D platform in a similar fashion.
The Virtual Earth team has just published a written case study on this application that I think you will find interesting as it speaks to benefits of the Virtual Earth platform that are also relevant to Public Sector customers.
Also posted, is a video that shows the application itself, and features recorded testimony from the iFly.com management on the value of the Virtual Earth platform for providing a realistic, immersive 3D environment for flight tracking. Look for it in the right hand column as pictured below.