Hi Andrew,
My own experience (after a couple of years of working with eye tracking) is that I find anything that follows my Gaze Point around on the screen quite distracting, and always switch such features off quickly. It becomes especially annoying if there is even a slight offset so that the Gaze Point visualization is not completely centered in the visual field, and the vision reflex kicks in that moves the eyes towards the (periferal) moving object and the eye-gaze starts drifting along the direction of the offset.
What I do like, on the other hand, is some visible feedback in connection with clicking. The best approach is typically some kind of discreet highlight on the button or thing that is about to be clicked. A discreet highlight could be to change the button text color from gray to white for example. I also prefer when highlights are only shown just when I’m about to select something – for example when pressing down a selection key. Highlighting the full surface of a button is usually too distracting, and having highlights just by looking around in the GUI I think gives the UI a flickery appearance (this is probably because looking around usually happens uncounsciously and it becomes distracting when this process is brought to conscious awereness).
That is how I like it anyway, take it or leave it 🙂