I think it might be best if I answered this one as I'm the original author of the code in question :)
Firstly, we're ok with you taking the code (though this question is a year old so you probably already have), we're in the middle of a big rewrite at the moment and this code is depreciated as part of that.
The file that Fabián linked to does contain the code that you need, but it also contains a lot of other code for the rest of the site that you don't. The bit that you want is actually quite simple but there are a couple of different things going on. Deep in that file you'll see the PS.CoverLoader class.
Firstly that takes all the thumbs for the page and starts loading them in the background. Let's just assume they've already been loaded.
The flicking is very simple - I'll just use pseudocode as you already have the js there (and you'd probably use jquery these days).
create array of all images for album
attach to album mousemove
on move find x position of the mouse
translate that to a position in your array
segment_size = album_width / img_count
segment = Math.floor(offset/segment_size)
switch album displayed image to be array[segment]
In terms of other questions regarding loading lots of images. It is a problem. This system loads all the thumbs for the page. It's inefficient - some pages are 10s/100s of MB. We tried created a single long image for each album containing all the thumbs (an image sprite) but that doesn't really work with this many different images.
My suggestion would be to load all the images for a given album on first hover and store that in an array in js.