Online image editors are a good case study of how Rich Internet Applications (RIAs) are evolving. It started with pxn8 that lets you do some basic operations on your images, including some filters. Then came pixoh, now called snipshot, that has even more limited functionality but you can move the image around on your screen as you can do in a desktop application.
And now comes Fauxto, with a UI unabashedly similar to Photoshop. It is built in Flex.

The functionality is ofcourse nowhere close to Photoshop. But one big advancement over other online image editors is the concept of layers

I frequently felt the need of Undo/redo while playing around with it. It seems to be the highest priority feature in their list. Number of filters is still limited.

It would be very interesting if they can come up with an API of sorts to let other developers write filters for them. They have a good platform and involving developers is always a good idea – they form a community around your platform and add extensions that you would’ve never thought of, or would’ve never found the time to implement.
Fauxto is still “way in beta” and sure there are bugs. Like if you apply Free Transform on a layer and move it, the layer goes blank. I’m sure they are working on it.
Among other things, it’s a proof-of-concept of the possibility for an RIA to have a UI similar to a desktop application.
Google just released a J2ME application to get GMail on the mobile phone. You can get it by pointing your browser