I've implemented drag-scrolling on my Freerunner (drag on the touchscreen to generate scrolling, instead of dragging events). By placing this code into the X mouse driver, all applications that support the mouse wheel (the vast majority do) automatically become finger-scrolling enabled.
With this patch, scroll events are generated by pressing on the touchscreen, and dragging in the desired scroll direction. Dragging can still happen, by pressing the touchscreen, and not moving the finger for a short time (200ms currently). This is useful for selecting text, for example.
This makes applications not specifically designed for touchscreen devices work much better, since scrolling can happen by touching the screen anywhere, not just on the scrollbars at the edges of the windows. Apps designed for touchscreen devices (like illume and anything built with elementary) don't work as well, since some of the scrolling functionality is implemented at a higher level, and potentially conflicts with the new code.
not in xorg
doesn't work when screen tilted
xglamo patch: 
bitbake recipe including the patch: 
precompiled package (works with SHR): 
The Illume keyboard doesn't natively support the mouse wheel and contains its own scrolling code.
By default Tangogps zooms in/out in response to the mouse wheel. I feel this is inappropriate, so I disabled it. With the patch below, the mouse wheel does nothing; I haven't connected panning to the wheel. With the patch below, you have to hold your finger for a bit before moving it for the panning to happen. This isn't ideal yet.
I use Dillo as my browser. Dillo uses the FLTK2 toolkit, which supports vertical scrolling by default, but not horizontal scrolling. Here're are FLTK patches to fix this. Also, a fix for an FLTK keyboard bug triggered by the Illume keyboard is included (bug report).