Juozas Kaziukenas is also participating in the WinPHP Challenge and has already selected his project:

My project will allow people to upload huge collections of photos (probably archived in one zip file) and get nice online gallery. Users will have selection of Ajax or Silverlight version and password protection for galleries. If I have time, I will also add ability to select different photos shuffle style, background theme and/or music, and maybe even automatic tour with captions.

He's chosen to go with the Zend Framework as a backend and has already begun setting up the server with Windows Server 2008 and IIS (as connected through a remote desktop connection).

He has also looked at Deep Zoom and Dynamic assemblies to include them into his app.