DeepzoomIt does just that.
At least for the simple cases, i.e. no collection support and no selective resolution. But it generate files just right, as shown below (might not work on some planets) .
DeepzoomIt uses gdk_pixbuf for image cropping, scaling, composing. And it shouldn't be sensible to the inability of gdk_pixbuf to scale images bigger than 65536px.
The code is available on gitorious, use it if you like it: http://gitorious.org/deepzoomit.
[3159x2591 sized to viewport via DeepZoom. (shift-)Click to (un-)zoom. Drag to Pan]
[Update 2010.01.11: replaced the pure xaml viewer by a managed one. Pan+Zoom works.]