I actually really like the idea of this. I remember many times running dungeons or even primal fights with linkshell mates and having to sit out for long periods of time while members cycle in and out. Yes it's true that we often sat and crafted or did other things, but this would add an interesting alternative. I think it would be great to give the party leader control on who can/cannot spectate, just as if he were inviting into the party itself. Perhaps limit the number of viewers available so it doesn't become too excessive, and maybe make it so that once the instance has already started no more spectators can be added. This would eliminate any annoyance on the party leader during the actual instance. As far as how it would be viewable... I personally picture it like many FPS games do after you die and you're waiting to spawn. See the game the same way the people running it. Allow the spectators to view one of the available party members. So say I'm a CNJ/WHM, I could view from the party healer's standpoint and get that perspective. No free floating camera or ability to move, so no real way to cheat or anything. Give the player the ability to toggle through available party members so if they want to they can change views and get different perspectives. As far as battle log and other UI aspects being visible to spectators... I think some are a given. The Map obviously would help so the spectators can also see the layout while running through dungeons. Battle Log I could argue either way as on or off... Perhaps add options in an individuals menu. What to allow/disallow while being spectated? Map on/off, Battle Log on/off, Action Bar(s) on/off etc?

Anyway... looking forward to seeing how this thread progresses and all the interesting ideas that are being thrown out