I've been messing with S3 for a while... I just came across the latest beta from Jungledisk, it doesn't use DavFS and all the other crap anymore, now it just uses FUSE. You can mount S3 into your file system (I have it at /mnt/s3) and then it becomes a local resource. I've set up a script that takes the local backups and copies them to that drive once a week. It's slow, but functional. Before using this beta I was using infinitebits, which makes S3 an ftp service. That was quite a bit faster, but I think my data was going to infinitebit's server and then they were copying it over to S3 in the background.
I wouldn't think about using it as a "live" file system for storing attachments or images, it seems to be too slow for that sort of thing.
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