I know it is possible. I have seen it a couple of times, but it always struck me with: "how did they pull this off?". Those images that build up while loading, it's some kind of progressive image loading. It starts out with a low res version, and then a slightly higher res, and then slightly higher until full quality is loaded. Would anyone know how to do this?
While progressive jpgs now display in flash (up until fp 8 or 9 they didn't, I can't quite remember which version), I don't believe they actually load progressively. There are some solutions out there for faking it, you can always load and resize smaller images, but that's not very efficient.
Ted on flex has another solution to display an image as it loads, but it's not exactly what you're looking for.
http://www.onflex.org/ted/2007/12/progressive-image-loading-with.php