How to do on the fly transcoding for webapp?

I have a library of videos (in .avi format). I'd like to make a webapp where I could watch these videos youtube-style, but without having to have all of them converted to flv format all the time -- so, basically, I want use the app to choose one to play, and transcode it on the fly. I'd also like to be able to pause, seek, etc.

Is this possible? If so, what would the开发者_JS百科 overview of the process be? I know ffmpeg can be used to convert avi to flv, but I'm not sure about the rest of the process. Would I create one thread that start the transcoding, and then another which starts playing the output file as it gets transcoded? Or would that cause problems with playback since it would only be a partial file? Is there a better way of doing this?

For reference, I'll be using grails to write the webapp.

On the fly transcoding use vlc or ffmpeg with red5