This could be implemented as a compiz-fusion plugin.
Compiz-fusion already has a plugin for zooming in while still being able to use the input (mouse/keyboard), but none for zooming out. This would be extremely useful in low-res devices (the eeepc for example).
Having a way to "set zoom level to fit selected window" (maximize it) Would make this easier to use. Just zoom out, overview your virtual desktop and zoom in on what you want to work on next.
I don't mean this suggestion to be a duplicate of http://brainstorm.ubuntu.com/idea/388/ "Multitouch support and zoomable interface". That idea mixes two notions: multitouch and zoomable user interface. While both are a good idea multitouch support will be limited by hardware support and by Apple's patents on the subject.
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Developer comments
Some of this is already covered by the eZoom Compiz plugin, currently installed by default.
Vadim P: Yes, the shelf plugin is very similar to what I propose here. I didn't know it yet, thanks.
It will be very useful to work with in lower resolution devices (assuming it supports input redirection).
I suppose implementing a zoom out for the whole desktop is harder, as it would imply having to change the notion of "maximize". I suppose that when maximizing a window the best behaviour would be to expand to the size of the desktop at 1.0 zoom (and take some care to keep the window aligned to the virtual-desktop grid)
i like zooming in with compiz, it's very fast (better than using zoom in firefox) and useful. But this idea would take it to the next level. Workspaces are a good metaphor and are extremely helpful. But one thing that annoys me when switching to a different workspace is that I loose sight of the previous one. With a zooming desktop you can keep in sight applications you are currently working with, and simply pan and zoom in/out to where your task demands.
It's currently not possible to allow user interaction with transformed windows (i.e. so that downscaled windows will receive mouse input events properly). In order to do this, Compiz needs unofficial input redirection patches to make it into the X server codebase.
The ezoom plugin appears to "fake" this ability for zooming in by using some kind of hack. But afaik this won't work for a general ZUI. It seems like this idea will have to wait until input redirection support is officially available.