So here is the official word from the Flash Player 10 Release Notes on Adobe Labs
File Reference runtime access — Bring users into the experience by letting them load files into your RIA. You can work with the content at runtime and even save it back when you are done through the browse dialog box. Files can be accessed as a byteArray or text using a convenient API in ActionScript without round-tripping to the server. You no longer have to know a server language or have access to a server to load or save files at runtime.
I can’t tell you how happy that I am to have this feature back. You can see an example of this on the Flash 10 videos with Justin Everrett-Church and right near the end of the Pixel Bender video Justin says “I can go down here and hit save….” and he saves an image directly from Flash to his desktop. This is Fantastic!!!!
Happy Flashing to all,
Curtis J. Morley