I've continued to work on my SWFUpload revision. I've tested the graceful degradation a bit more and it is slowly improving. I've tested it with Flash 2, 4, 6, and 8 in Internet Explorer 6. Of course, it only works in Flash Player 8 or above but it correctly degrades for early players.
Flash Player Feature Detection
New SWFUpload features
I didn't think I'd go so far in this project as to begin tweaking the Flash files. But now that I have I am going to begin looking in to adding Cancel Upload and Cancel Queue features.
It's been an interesting excursion so far but I think I've just about spent enough time on it. Hopefully I'll have what I want wrapped up pretty quick.