Thank you for your reply, Cameni. Yeah so there are 3 things here:
1. Controlling the free camera, which is the mode that Outerra is in when started.
2. Controlling the transformation of imported models.
3. Controlling the camera when 'inside' a cockpit.
It seems that the IGC API already supports 1 so I can start using that.
For 2, one way to do it is to provide a base class called Vessel (or something similar) that implements the basic API for importing meshes and transforming/drawing them in the world frame. Each object of Vessel could have a world transformation matrix that will contain its position and orientation. If an user wants to add extra functionality to a vessel then he can derive from Vessel. During rendering this world matrix * view matrix * perspective projection matrix = final co-ordinates on screen.
For 3, its important to know that we are in 'cockpit mode' and which vessel/vehicle/model inside whose cockpit we are presently located. Once these are known then the mouse can be used to control a cockpit camera which I guess will use a different projection with a different field of view perhaps. It will probably have bounds on the amount it can translate in each direction. If the IGC API can provide functions to activate a cockpit camera and choose the vessel inside which to focus then this can be done pretty easily.
In Orbiter, the rendering engine keeps track of a few things things to ease the process of getting in to cockpit mode and out into the external world again. There is always a 'focus object' and the camera is generally focussed on it when the object is chosen. But it can be moved as far away from this object as we want. If the focussed object is a vessel(as opposed to a planet) and this vessel provides a mesh of the cockpit and a cockpit camera position, then pressing a key will activate the cockpit camera mode and the user will be 'inside'. Pressing another key brings him back out again to the external world with a free roving camera. The cockpit mode is simply the cockpit mesh as it looks like from inside, drawn after the scenery has finished drawing.