Part 1 of the tutorial teaches how to simply upload an image file from a Flash interface and then display the image back in Flash. The file doesn't necessary need to be an image file, but if its not a PNG, GIF or JPG then you can't do all the cool stuff to follow.
Part 2 and 3 cover the following example scenarios for this type application....
Scenario #1: Upload an image into Flash, and then the image becomes drag-n-pable OR dress-up-able. The library can hold different items you might want to dress up the image with. The example file just uses a hat, but you can extend this to include tons of different images. And once you dress up the image, the user can print out the final composition.
Scenario #2: Upload an image into Flash and a looping motion tween is applied to create a hovering effect. Again you can drag and the image, but this time a bullseye target appears and if you drag the image over top, a command will detect if the image has collided with the target and call a function to do whatever you want. In the example file the image just shrinks and "sticks" to the bullseye, then calls a URL to open.
Scenario #3: Upload an image into Flash and set a mask for it. So both the mask and image are moveable for fine-tuning, and you can then set / unset a mask for it. The mask can be any shaped-design.
Scenario #4. This time the user can upload two images from Flash which get used in an animation. And instead of using preset masks like the previous example, you can adjust handles or control points on the mask to get a more exact masking effect. A good example of this application would be if one image uploaded is a head, the other, a mouth, and then you can animate those in sync with music or a speech track to show a lip-synced animation.