Simon Collison blogged a pretty cool CSS technique he called Image fades for overflow: auto. Essentially this technique allows you fade the text as it nears the edge of the box before it would hide from view. Here's the image Simon shows on his site:
This technique could probably use some improvement. It's probably something you could wrap up in a JS library to apply to elements automatically. Regardless, it's a cool looking effect. Kudos to Simon!