What you need is...
- a digital camera
- suitable image stitching software
- a tripod (you can try it by hand but it is a headache, believe me)
Step 1 - set up the camera on the tripod in the middle of the panorama you want to display. Spend some time taking pictures, rotating the camera each time and making absolutely sure that there is a nice chunk of overlap between each picture and the next. You'll end of with a dozen or more pictures (remember this until later).
Step 2 - get all the pictures on your computer. Now fire up the image stitching software. What this software does is to take each picture, determine reference points that are common between two adjacent pictures, and then uses a clever algorithm to seamlessly 'stitch' the images together. It causes a little distortion that gives the 'fisheye' effect seen on panoramas - nothing to worry about.
When it has finished, you have a long single image that looks very odd with curved edges all along it as a result of the distortion. However, the middle part is the usable panorama.
Oh. Make sure the first and second images in the panorama sequence are also tacked on at the end. This means you can use Flash to jump to the begining without the user knowing.
Step 3 - You can probably work this out for yourself, but you just need to import this into Flash, place a mask over the area you want to display (to get rid of those lumpy bits from the image stitch), and animate it. When the duplicate part at the end of the stitch image is showing, jump back to the start and repeat the scroll.
Your best bet is to try it - then you'll understand much more.
The key is the image stitching software. Some graphics packages have the facility, but I like PanaVue
http://www.panavue.com/
Oh. That 'dozen pictures' comment? Well, if you take portrait pictures you'll need a lot more, and it also depends on the amount of overlap you give. It is best to allow a lot of overlap just in case. Don't be stingy.
Also, the more images you take the less the distortion - or rather the more of it you get which creates a more uniform image. Your call :)