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I'm going to guess Jakez needs AVI because of quality issues - FLVs particularly are crap when trying to do program demos.
You can use WMVs, and encode to about 500-600kbps. Those can be streamed (the index to the streams come at the beginning of the file), but unlike FLV the user cannot seek to a different timepoint until all the video has downloaded (the index to the frames themselves are at the end of the file, just like AVI).
H.264 can be a solution if you get the encoding parameters right.
If you're not doing something like a on-screen program demo hard to understand why it has to be AVI. AVI is a desktop format, designed well before the Web.
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