i'm not sure how far back the info i am about to give goes, but on Lion in system prefs/universal access/seeing/zoom/ there is a preference you can set that is very much like Zoom It. under Zoom, just click the box that says "Zoom in window." Option-Command-8 brings it up and makes it go away. Control-Option brings up the Zoom window only while you hold down those modifier keys. once you check the "Zoom in window" check box, the Options... button lets you set the Zoom window size and some other stuff.
it's important to keep "use scroll wheel with modifier keys to zoom" checked with a shortcut -- i use Control. the reason i say this is because when you option-command-8, use Control to zoom in and out in the Zoom box if at appears nothing is happening, or command-option-(-) or command-option-(=). more importantly, for the "enable temporary zoom (control-option)" to work right, it's command-option-8 to turn the Zoom box on, then control-zoom all the way out, then control-option will make the window appear only while you hold down those keys.
needless to say, bringing up the "temporary-zoom" box takes some practice. but the "Zoom window" box is as simple as option-command-8 and then zooming in or out with the method you choose for zooming in or out.
the one big drawback to this bit of wit is once you do check the "Zoom in window" check box, you lose the ability for zoom options -- command-option-(=) and command-option-(-) or control-up and control-down -- to zoom the entire screen -- those keyboard commands will now only zoom the Zoom box.
if anyone knows how i can use the Zoom box and still have the full screen zoom at the same time, please let me know.