Of course, this seems intuitive if you use QuickLook in the Finder a lot or use the this hint for a similar effect in the Media Browser, but it's not documented anywhere so I hadn't tried it.
It's a huge help to use this function to quickly look more closely at a few images while still taking advantage of the normal grid view to quickly browser through the rest of the image library. No more switching to full-screen mode or zooming in and out just to examine a few images.
[robg adds: I don't think this is exclusive to iPhoto '08 or Leopard; I recall it working in older versions of iPhoto as well, but perhaps that's a false memory.]

