So how do scale builders go about making rotating turrets? On my upcoming Albatros CI project I'd like to make the observer's turret rotate in flight possibly linked to rudder movement. It would be neat if I could get it to rotate in the opposite direction to the direction of a turn.

Photos (and diagrams) always welcome!

You could slave the servo controling the turret to the rudder or ailerons and just reverse that servo. You could also remove the pot signal and caused the servo to contiuiously rotate with a snap switch on your transmitter to turn it on and off.

I'd like to figure out something mechanical so that I don't have to deal with the weigh and space of an extra servo.

http://www3.towerhobbies.com/cgi-bin...?&I=LXDS62&P=7
The link is to Tower and shows a Proctor pulley. There are several other types too. You could use three or four of these to support an aluminum ring upon which the turret, gun and gunner would be mounted for easy turning. Powering it is another matter but making a free turning assembly is half the battle.
Personally I would do as gary9648 suggests with a mini servo turning a rubber wheel which would run against the ring. The servo/drive wheel would be on a pivot with a rubber band to provide tension.
I've seen the plans for the CD Scaledesigns C.1 and they are FANTASTIC. It will be a really great model.