It is definitely possible to go overboard with visitor tracking. I visited one site last week (I wish I saved the URL!!! Update: It's an applet on Information Week...check out this article on Google Analytics as an example...they're using an On24 flash applet to deliver News TV...the On24 applet collects data through Limelight...as irony would have it, On24 uses Google Analytics on their site) that sent a tracking hit every second! What could they possibly do with that information? I guess they believe they will know more precisely what each visit duration was. But once you start accounting for all of the data anomalies generated by visitors who keep their browser open longer than the actual visit occurred, the data is no longer precise at all.
There are some examples of when visit duration tracking could be very useful (and much more accurate), especially when bundled with a feature. As I type this article, Blogger's auto-save feature is sending a "status" hit every minute or so, which has the dual purpose of saving my draft as I type, and giving Blogger some pretty accurate information about how long folks take to write (and edit!) articles. (Geek sidebar: they use a GET request with the draft text stored in cookies...I wonder what happens when the article is larger than 4k bytes?).
Gmail uses a similar approach. Use the CustomizeGoogle Firefox extension with Google Suggest selected, and every letter you type in the search bar is sent to Google. Wow.
Here's a fun use of technology, brought to you by the advertising geniuses at Virgin Digital. Warning: If you like rock music, trivia, and have a few minutes to spare, be prepared to actually spend a few hours on this, and of course...they're watching how long you spend on the game (we've only found 62 of 74!).