I think what we are seeing here is a combination of a fata morgana and an inferior mirage. The clouds that are seemingly above the horizon when they are actuslly below it is the inferior mirage while the heavily distorted view of the sun is the fata morgana. It is amazing how much a fata morgana can distort an object.
And epitalon1, I see what you are getting at, although it has nothing to do with a superior mirage. When at or close to the horizon, the sun and moon appear to be a different color and are enlarged. I don't know what that effect is called, if it even has a name. However, this is NOT a superior mirage.
Instead, a superior mirage is caused when light refracts off colder, denser air than the air that is immediately below it. This causes the image to become inverted and appear to be upside-down. A fata morgana, on the other hand, occurs when light is bounced around and refracted in many different ways. The object seen therefore may appear to be upside-down, up in the air, flipped around, irregularly proportioned, or a combination of these effects.
For more information, click on this link:http://en.wikipedia.org/wiki/Mirage