A Window Hook Function to display the Z-dimension of an image using cursor position

Is the Info panel not sufficient for your needs? For the image's top "Graph" menu, select "Show Info" (ctrl+I in Windows). The cursor(s) give position and 'z' data.

It is necessary that the graph which plots the Z dimension updates automatically as one hovers over the image with the cursor - similar to the line profile utility under the image tab.

Here's what I would try:

Make a plot of the image (Graph1), and a second plot of the slice of wave w:

create a window hook function

Use SetWindow to invoke the hook function for mousemoved events

Figure out how to translate the mouse coordinates to get the current value of p and q to feed to the ReplaceWave operation.

I don't think there's any way to do it without writing at least a bit of code.

It might be easier to do it with a cursor hook, rather than figuring out mouse coordinates. So instead of hovering with the mouse you would have to drop a cursor on a pixel to update Graph2.

This isn't quite what you are looking for, but I wrote some code for doing something similar with 2D waves.  The code generates an image plot of the 2D wave, a plot of the slice along the row of the cursor, and a plot of the slice along the column of the cursor.  It uses a window hook to automatically update the row and column plots whenever the cursor (on any of the three graphs) is moved.  It's been a while since I've looked at the code, but I think it could be used along with Tony's suggestions to do what you want.  

This is modified from an existing package and uses a mouse click on an image instead of a cursor (pretty much what Tony suggested). Maybe this is of use.

Set up image

Hook funktion:

then use hook:

Then click on the image to display the z-direction.

Thank you very much for all of your answers, I used ChrLies approach and it does what I want. Nevermind the "hovering", that was inaccurate language as it turns out...