In TrackIR 4 pro (don't know how the TIR3 panel looks like, sorry if that's the same) you got something like "smoothing". Generally speaking it waits a little bit longer for input and then does one smoother move. This can reduce shaking but it causes a delay between head movement in RL and in game. I have to use it sometime exactly because the issue you described. And still it doesn't always help.
From my experience switching the engine of C4 in X-Plane in 6DOF cockpit where you have to keep the switch pushed for few secs and the switch is size of a cursor can be a pain.
The idea with cockpit relative cursor is great though it needs to be done well. Switching between those 2 is a must as well as good solution to what happens with the cursor when in cockpit relative mode and I move my head 180degrees to the other side of the cockpit. Whether it stays where it was (outside of the screen, probably not the good idea), moves with the edge or something completely different.
The idea above by burnzoire about hiding cursor after few secs and then putting it in the middle of the screen might be annoying for ministick/mouse like on my X52. Imagine you pushed few buttons on the bottom left of your current point of view but forgot about one and the cursor already cenetered. You don't want point the head on those (couse you're flying low & fast) but need to push that button. You have to move all the way from the center screen to bottom left again. With real mouse it's not a problem. With mini stick that got constant cursor speed it might.
Overall I'd really like to see that.