It is said that Busoni created a vibrato effect by rapidly moving the sostenuto pedal up and down while holding chords; this can also be seen in his music.
It is definitely an effect that is more than one imagined in the composer's ear. I believe Liszt taught it, and it was known in the early Russian school (it can actualyl be heard on a recording of Scriabin playing one of his op.11 preludes). It has to do with the pedal and the voicing of all the notes around the intended vibrato. Liszt of course notated it many times in his pieces. But I believe it is really one of those effects, like holding down chords without playing them a la Schoenberg op.11, that can be heard at best 3 rows from the stage. With modern recording techniques, you can sometimes hear the pedal going up and down, so it has to be extra-super-subtle in order to be succesful.
However, I believe it was Arrau, who used to do a vibrato motion on long held notes in Classical repertoire, for the purpose of giving the audience a visual reminder of the sustained pitch. Also, if you try it on the piano, you'll find it is a quick way to relax your arm and joints.
Walter Ramsey