The sollution is called X-mouse. Download and install this free software, add ELFC.exe to the app config list, select it, change the behavour of the right mouse button to 'Mouse Wheel Scroll Down' and the auto zoom is history! At least it is for me... This does not entirely override the GTA IV mouse functions as I first thought, it just adds mouse wheel down scrolling to the right click instead of overriding it completely. In other words this program is basically constantly scolling down with the mouse wheel for you while you are pressing the right mouse button, and GTA still does what it's supposed to do with right click (aim).
Note that this will disable zooming in with the sniper rifle, because right clicking will auto zoom out with this fix.
So, I got it working to my liking and don't intend on playing around with it more to get the sniper working. If someone else can figure it out that would be cool, but I'm happy with this method as I hardly ever use the sniper.
*** EDIT: Edited post, found a setting that works more stable than the method I originally posted. ***
Edited by McAkrylamid, 20 January 2011 - 12:37 AM.