Its used in finding stresses in perspex models of bridges etc. or even by stretching a transparent plastic bag, the effect is quite startling.
The technique is to put the polarising gel in front of a continuous light source so the plane of polarisation is say strait up and down, then put a linear polarised filter on your camera with the polarising left to right, if you stretch a transparent plastic bag which is under the polarised light and viewed through you cameras filter you get an interference pattern of all the colours of the rainbow where the stresses are.
I don't think the effect is as pronounced with a circular polariser. You can use a linear polariser on most DSLR's by ignoring the metering and auto focus and using manual, Pentax cameras are OK they don't use Polarised light in either their metering or auto focus systems.
Constructional engineers use the technique by making perspex scale models of bridges etc, then they can actually see where the stresses in the construction are under various loads, they can see at a glance which part of the structure is carrying the load and how it alters when the load is moved.
The effect will also work with flash of course, its just easier to use a continuous light source, even an anglepoise type desk lamp will work, you just need to watch the heat on the polarising gel and have an air space between the lamp and the gel. The gel only works when flat if it is curved it scatters the light and the polarising effect is diminished or even lost altogether.
Chris