The new Google Earth 4 (beta) is using COLLADA (1.4) for its textured 3D models. You can drag and drop a COLLADA document on the earth, and then position the model where you want it. Models are defined independently of Google Earth in their own coordinate space. When a 3D model is imported into Google Earth, it is translated, rotated, and scaled to fit into the Earth coordinate system.

Support for exporting COLLADA models has been added to SketchUp. Even in its free version, this tool lets you export kmz files, which are zip files that contain the COLLADA (.dae) file and all the associated textures, in addition to the klm geospecific information.

Both SketchUp and Google Earth are currently in Beta. Please report the issues to Google that you may find regarding COLLADA support.