I am sure it's possible to be able to drag files onto a Flash movie inside a browser, but is it possible to achieve the same functionality with Javascript?
I have seen a site (can't remember) that did this, but I never checked if it was a pure Javascript solution compared to a Flash solution.
I am leaning towards the not side, I believe that breaks the limitations of Javascript, although if there is any solution I would love to hear it. My only worry is it won't be supported that well across different browsers.