I found this little freebie: Squirlz Lite. It's just 600 K big. Description from their site:
<hr>Animate, bend, distort and loop a selected part of any image by drawing an outline around it, and then a second outline to define the shape to be molded into.

Any kind of image can be distorted and animated - particularly text, logos, and photographs of people etc.

The animation effects available are: continuous flowing motion, and simple to-and-fro motion - both of which can be applied to any sort of distortion and looping that you can come up with.

Examples of animations built with Sqirlz are available on the samples page. Not all of these can be built with Sqirlz Lite, but those which can are indicated.<hr>
As far as I can tell, one can export animations to AVI and to SWF. Unfortunately I won't have much time to play with it, but maybe you Loungers will. Enjoy!