I'm trying to prove some things about the action of the Möbius group on the "circlines" in the extended complex plane, ie. circles on $\mathbb{C}P^1$.
I find that while I have a good grip on Möbius transformations (as $PSL(2, \mathbb{C})$), I don't really know how I'm supposed to treat circles.
Points on the sphere are lines in $\mathbb{C}^2$, so I'm wondering if there's a way to represent circles as things in $\mathbb{C}^2$. More concretely, let $X$ be a circle in $\mathbb{C}P^1$, and $\pi : \mathbb{C}^2 \setminus 0 \to \mathbb{C}P^1$ the quotient map. What is $\pi^{-1}(X)$?
EDIT: Many thanks to John Hughes for helping me figure out some of the earlier parts of my question:
Abstractly speaking, is the space of circles on the sphere a manifold? Or maybe some sort of space with singularities? What dimension is it? How do I work with it?
It seems that circles on the sphere do in fact form a manifold which is double covered by $S^2 \times (-1,1)$ or $S^2 \times [-1,1]$ depending on whether degenerate circles (=points) are allowed. The space of circles is one of the above manifolds quotiented by the relation $(x,y) \sim (-x,-y)$. The quotient of the former becomes a manifold, and the quotient of the latter becomes a manifold with boundary.
Assuming that you're either talking about great circles or circles of nonzero radius, then yes, the space of circles on a sphere is a manifold.
To make sure I don't screw things up, I'm going to talk about the case of great circles on a real sphere, because that has all the features you care about. In this case, each great circle corresponds nicely to a normal line to the plane of the circle, so you've got a correspondence between the space of great circles and $RP^n$. If the circles are oriented, then you get a correspondence with $S^n$.
For all circles (but I'll restrict to nonzero radius, and oriented circles), you have the following correspondence: your circle lies in an oriented plane with an oriented unit normal vector $v$. For any point $P$ of the circle, $ t = (P - C) \cdot v$ tells how far this plane is from the sphere's center, $C$. Alternatively, given $v$ and $t$, you can reconstruct the circle. So this gives a 1-1 correspondence between your set of circles and $S^2 \times (-1, 1)$. $$ \newcommand{\ii}{\mathbf i} $$ Your central question: if $X$ is a circle in $S^2 = \mathbb CP^1$, and points of $S^2$ correspond to lines in $\mathbb C^2$, what does a circle in $S^2$ correspond to? Well...to a family of lines in $\mathbb C^2$. Let's look at the equator as an example. Under stereographic projection from the north pole, this corresponds to the unit circle in $\mathbb C$. Each point $z = \cos t + \ii \sin t$ of the circle corresponds to the line in $\mathbb C^2$ that passes through the point $(z, 1)$. So the preimage of this circle, in $\mathbb C^2 \setminus 0$, is $$\{ ( a\cos t + \ii a\sin t, a) \mid t \in \mathbb R, a \in \mathbb C \setminus 0 \}.$$
This is sort of a "double cone" in $\mathbb C^2$, with its apex at the origin, except that each of the ruling lines or "generators" of the cone is a complex line (i.e., a plane) rather than a 1-dimensional line.