This technology developed by Ariel Shamir from the Efi Arazi School of Computer Science resizes the content of images in the same way that web pages are dynamically scalable. It’s easier to explain once you seen the video, but basically it intelligently adds or removes pixels so you can squash or stretch an image without it distorting.
Of course it raises some pretty interesting questions about the validity and veracity of photographic images, especially when used as evidence, but this kind of thing has been going on for years before the widespread use of digital tools. Stalin was famous for manipulating photos and there is of course the famous National Geographic moving-the-pyramids one that was one of the early examples of digital manipulation (and in a ‘scientific’ journal).
I think it is also a great example of how one way of thinking in an area (web design) influences the way that one sees other disciplines (image manipulation). Before web browsers, the idea that pages (and thus images) would have fluid layouts would have seemed absurd.