Hi,
for my selfI enjoy the concept, however I think modestely that to bring it a bit in the top may be interesting.but regarding all the others elements that have to be in the top, it is hard to find some space for this.

the design of the thumbnail is clean, the mirror effect is nice also.

now the technologie: flash+action script, the problem with those is the lake of flexibility (I mean that if you want to add a category some day you will have to rebuild the .flv) (but you can overcome this if you are using actionscript+xml).

just a note: there are several (javascript slideshow, or pictures gallery) they are realy teeny and less weight.
something build upon Jquery.

hope that it help.