First: Does your friend have Google Earth installed on his/her phone?
If you email the kml as an attachment vs. navigating directly to the kml file uploaded to the web (use some sort of FTP to accomplish this), iPhone 4 will first display the kml source code. To open with Google Earth to click on the top right on the "download" button (looks like the arrow in a folder deal). This will provide you three options: Open in Google Earth, Print, or Cancel.
Click "Open in Google Earth" and Google Earth should open to the extent of the kml. Use the find location icon (bottom left of the iphone) to find your current location.
Hope this helps. Test this if you want to see what I'm working with: vtid.us/test/zetest.kml
Contact me if you need further assistance: zach at vtid . us