Soh Tanaka has written a tutorial about making a Fancy Thumbnail Hover Effect with jQuery. Basically all they are doing is animating the thumbnail’s size, absolute positioning coordinates (vertical alignment with css), and padding when we hover over. During this animation, they also switch the value of the z-index, so that the selected image stays on top of the rest.

It may not be as smooth as the flash version, but its definitely a neat effect. If you switch up the absolute potion coordinates, you can create various ways the hover effect pops out as well.

Requirements: jQuery Framework
Demo: http://www.sohtanaka.com/web-design/examples/image-zoom/
License: License Free