They definitely need a more graceful fail for zooming too far in than a gray box in place of the tile that says "No imagery available at this zoom level."
You're scrolling around, looking in on something, and then bang the whole screen is gone, nothing but gray boxes, and you're whole sense of context is lost... This bothered me on maps, doubly so here.
Also, is there some reason why three people have posted the same link? Here it is again, for those who've missed it:
http://www.google.com/sky/#latitude=-70.00556654574503&l...