The guys at thecodecentral.com had developed pretty nice implementation of Asynchronous File Upload. It worked quite smooth as I tested it, here is what they say:
The theory that makes asynchronous file upload work is not complicate, but the code for it to work can be a little bit lengthy if it was developed from the scratch. Since there no reason to reinvent the wheel and YUI’s Connection Manager can take care of most of the dirty jobs for us, in this article, I’ll show you how to use it to do a simple asynchronous file upload. Because XMLHttpRequest object does not support file upload, the Connection Manager uses inline frame approach. Basically what the Connection Manager does is it creates an invisible IFRAME for file upload and parses the server response once the upload is completed. In the end, what you get is an illusion of Ajax-like file upload interaction. However, since this is an IFRAME, some Ajax events such as success or failure are not available in IFRAME method as they are available in regular Ajax request in YUI.
Try their demo example here
Their original post is here
Also check this solution. Its made the old-school-way with separate iframe file but also has implemented progres bar 
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I tried to use it but doesnt work with mozilla 3
Hey, cool tips. I’ll buy a bottle of beer to that person from that chat who told me to go to your blog