NOTE: hold down left mouse button to make trails
Not sure if something like this is anything like what you are talking about but - just to explicate how simple it is - it took about 5 minutes. And the source image is yucky with the alpha going into the border. Yet still pretty neat.
Edit: Let me know if the above is part of the effect you are going for and if so, I will put some more time into it and get those mist effects like shown in your image working.[/QUOTE]