First of all, nice try. As developer I kind of (think to) know the technique involved processing this and for most part this could work. However since WinMo 6.5.x has it's own overlay I must admit it's not working properly on build 28008 (and 28002).
Actually it does work if you don't release the screen, but once you do, it's completely useless. You can't do anything but scroll, this probably because of the kinetic scrolling overlay. (This only happends if the image is larger than the screen ofcourse, everything else works as advertised!)
Second, may I add a suggestion (something I once tried in an application but never finished)? If you place your finger on the photo and then place the second finger the application imediately zooms in to like 400% (depending on the place your finger is placed), This makes it hard to pinch-to-zoom out, since you actually have to place the two fingers on the same position.
My idea is this. Whenever your first finger is placed down (and the coordinates are stored) and you place the second finger on the screen, the app would recognize this as a movement of the first finger but in 0 milliseconds. It might be possible to make a sort of minimum time required to move from 'a' to 'b', so the initial position of the two fingers can be 'stored'.
I hope I made myself clear enough for you to understand, as I do not have too much time to explain it better. If you like I can explain it better, but that would be later tonight, for now got to run!