The new file reading stuff in HTML5 is fantastic- I've written a little JS widget for my site that takes a local video file, reads the first 100KB of it, then sends that off to a remote video processor by cross-domain AJAX to get a thumbnail, which is then loaded onto the user's page.

It really is amazing what you can do. The only thing missing is being able to decode video metadata so that I know whether 100KB is too little or too much to send if I want to extract a single frame.