I thought Dragon Labs' Dragonfish Login Form Demo  was really neat. They implement the effect by using a rather large background image and a mask image and move the background image around via Javascript.

I wanted to see how close I could get with only CSS3 (and a little bit of helper JS).

TODO Writeup inset shadow mask technique, and more in-depth impl. info.

On Webkit browsers - I got pretty close, with color transitions and keyframes and using a background gradient animation to simulate the "highlight" textures.

Firefox doesn't support keyframes for the color transitions, so I implemented a used fallback animation with simulated color transitions. IMO the fallback animation on Firefox 4 doesn't look too bad either - with older Firefox's falling back to non-animated glow mode.

More variation in highlight and color angles

Dogfish has a much better variation of colors and highlight textures thank to the use of images.

Better browser support for animations

You could probably hack around Firfeox's lack of keyframe support via color transitions and classes.