This YouTube video was shot from the back seat of lead's 4. After the rejoin to three, we did a series of oblique loops. That's me flying two.
http://www.youtube.com/watch?v=1RzzQqaktDM
This is really tight trail, done intentionally while trying to stay close to the camera. At this distance, it was hard to manage all the effects of the looping maneuvers, the prop dissimilarities (FP for me and lead was CS), and camera requirements. You can see how lead/lag affects the formation. No power changes were made throughout the trail sequence.
As you can see, I was flying just offset enough to miss lead's wake. But, in the last loop I slid in right into the slot, and Bam! Hit the wake big time; my prop ate all that dirty air and it was like shutting the engine off! You can see me get spit out really bad at the end; had to even relax the pull a little to prevent stalling.
Both of us here were ex-USAF instructor pilots (ok, let the jokes begin!) and taught formation as part of the job. This isn't as easy as it might look, so don't take this post as license for a noob to go try anything special.
edit: Extended trail is managed with lead/lag geometry in the formation. So, when you get really tight, like toward the end of the video here, its hard to use lead/lag to manage position because you're just too close. At the opposite end of the scale, being too far away also poses problems. There, lead/lag becomes hard to judge due to the curving flight path and small position changes will make really large changes in lead or lag.
The lesson: there's a "sweet spot" for extended trail formation, dependent on aircraft type.