After reading the Skyrim tweakguide, I've been messing with these settings, this is the setting im running with and a timescale set of 8. This smooths the shadow transition into smaller increments. By changing these numbers and going in game to see the result, you can get the shadow movement you want. To use these settings, add them to the bottom of [Display] in Skyrim.ini

fSunShadowUpdateTime=10.0 <- I think this is the time given to shadow movement/transition
fSunUpdateThreshold=0.0 <- and this is the increment, so if set to 0.5 you would get a slight pause in between transitions.

Also using these in SkyrimPrefs.ini

iShadowMode=4
iBlurDeferredShadowMask=7

http://www.geforce.com/Optimize/Guides/the-elder-scrolls-v-skyrim-tweak-guide

This is not perfect by any means, but it does get rid of the 1 inch shadow transition.