I've been messing with this a bit myself, and I got the cam2pan+newview setup working, in principle. Under "controlled conditions" it is fine, you have pretty good control of your head movements etc. In combat however, you (well, I anyway) mostly don't have the presence of mind to control your head movements to the degree that is necessary with this setup. What happens in reality is that you'll notice an enemy, go into scoped mode and WHAM WTF, you're looking the wrong way because you moved your head too fast in your excitement, and now you're dead. Also since the resolution is pretty limited in arma compared to real life, you'll often be hunching over to get a closer look at your crosshair and the couple of pixels behind it that might be a hostile. Cam2pan doesn't understand this at all, it will just send your view flying up or down.
A few hints I have come up with for those who do want to try it:
set the y speed in cam2pan quite low. This will limit the amount you can look up and down, but in infantry combat at least it makes using ironsights much more tolerable.
If you have a small webcam, consider mounting that on your head and a led on your monitor instead of the other way around. This way you can utilize the entire field of vision of the camera, which results in a much smoother experience. Also if the led you use is not a very wide-angle one, if mounted on the head it's brightness in the camera view will drop rather dramatically when you turn your head. With the camera mounted on your head instead this problem is removed. It does mean you will only be able to turn your head so much before the led marker goes out of the camera's view. In my case at least I found a suitable movement speed that would let me turn my head at a fairly natural-feeling rate and allows me to turn about 50 degrees to each side, maybe a bit more.
Overall, though, I find you have to pay a bit too much attention to what you're doing with your head for it to be more than a fun gimmick. Mostly it will just get you killed in my experience. I'll see if I can tweak the settings a bit to get a more usable system, but I'm not very optimistic at this point. Overall, ask yourself how often you've felt that being able to freelook around more intuitively would have made the game better for you. For infantry, I find the alt button to be a very good solution for this in the end. Pilots will probably benefit the most, I tried a chopper mission briefly and it did lessen the claustrofobic feel of the cockpit considerably. I did also crash a lot more though, but then this was before some tweaks I did to my settings that made the tracking smoother for me.