Well, I've been working on Blackwood (I don't have a registered copy here at work) ALL DAY and can't get the damn thing to work. Every time I try the program that compiles the files crashes on me. I didn't have this many problems at home, so I'll just have to try again once I get off work.
If anyone wants to try to replicate my results, here's how I'm doing it...
You'll need LFS, Fraps, IrfanView, and Autostitch. All of these can be downloaded for free off the web (with the exception of LFS full needing to be registered if you want to do anything other than Blackwood).
Open Fraps and go to the Screenshots tab. Change the key used to something like NumLock (F10 will interfere with LFS). Set it to record a new snapshot every 1 second.
Open LFS and pick the track you want to use. Start a single player race and join. Immediately go to the pits. This will get your car off the track so that there's no "ghost car" like there was in my first picture in the original post.
Hit Shift-F to turn off all the extra displays. Hit Shift-U to change to free camera mode. Hit V to change to overhead view. Hold Ctl+Up Arrow to get the camera as high as possible (it doesn't go anywhere near as high as I would like).
Position your camera near the start line of the track and press NumLock to start taking screenshots. Move your camera across the track, back and forth from edge to edge. Try to overlap each screenshot (1 second interval) with the last one by about one third. This has to be done for the pictures to successfully stitch. You want to move back and forth across the track for two reasons: 1) to make sure the pictures stitch properly 2) to make sure you get the whole track, not just the center of the driving line.
Cover as much area as you can in three minutes, then hit NumLock to stop the screen capture and exit LFS.
You'll have to use a program like IrfanView to batch edit all the .bmp files. You want to change them into .jpg files and decrease them in size to about 400x300.
Once you have all the files converted and resized, fire up AutoStitch. The default settings work pretty well, so there's no need to adjust them. Just select all the jpgs you want to stitch using the File menu and it will do most of the work. Note that it has a 200 image limitation. You'll probably hit a memory wall before you get 200 images to work unless you have more than 512MB of RAM. If everything works successfully, you'll have a file called pano.jpg in your screenshots directory. You'll probably have to capture and stitch small parts of the track at a time, then stitch all of those together at the end. I suggest working with 50 screenshots at a time or less. It really sucks to get 90% of the way done, then run out of memory and have to start over.
So, this is how I've been doing it. It works pretty well as long as you don't push your luck. Feel free to give this a shot and post your results if you try it.