Microsoft have today release Virtual Earth 6, at least on the https://local.live.com site that is. You can read the full details here but here is a summary of the new features for 3d modeling:

What's supported

• Support for creating you own 3d models using a standalone tool created by 3dVia (Dassault)
• Import of models into local.live.com collections
• Creation of 3d tours in your collection which you can share with users. This has a dvd style play pause interface
• Creation of videos of your 3d tour (no mention of what permissions you have to use the video)

What's not support

• No way to import existing models, all models have to be created in the standalone tool, although you can import textures
• No way currently, although is comming later this year, to use these models in your own map mashups
• Limited tour options seems to just be 360 rotate at the moment so no tours with different viewpoints like Google Earth
• 3d Videos are heavily watermarked etc and no sign of license agreements specific to these, although we may have missed them

This is a great achievement for Microsoft and gets them closer to Google Earths 3d suport but there is still a way to go yet before we at Earthware will be able to use these new features for our clients.

We are working on some tutorials and demos at the moment and hope to post these later today with our updated impressions.