I'd totally hijaack the wordpress file uploader (flash version). it's open source and there is php and javascript (ajax) code that works.
shoehorning that nifty interface in would make image uploading a snap for single or multiple..
matter of fact, i intend to do that on a 'guinea pig' board at some point..
That's the SWF flash uploader, I think it should be fixed for flash 10 soon. Photopost uses it too - very nice.
http://swfupload.org/
