My discovery of this toolkit was from the article posted about the Firefox Kid. At the end it linked to the blogs of the two Parakey developers Blake Ross and Joe Hewitt. The article was abou Blake Ross but it turns out Joe Hewitt's blog was really the more interesting.
This is how I discovered Boxely. Joe Hewitt's posts about it are here:
His post about the release of Boxely.
Boxely - Part 1.
Boxely - Part 2.
Boxely - Part 3.
It seems to be capable of some really nice graphics and also integrated animations. I don't know how much XUL/XULRunner has improved to close the gap on the features that Boxely has. It's almost a shame that the earlier versions were not released without the COM stuff as it all sounded pretty good.
Boxely is available for download now and seems pretty capable. I, however, don't know if it is worth investigating further as XULRunner seems to do a pretty good job with stuff like SongBird. In fact I think the sentiments and vision behind the initial design is more more interesting than perhaps the final product.