I didn't spot a liquid (without particles) looking demo in the videos - would that be easy to make? Would you be able to make visuals look like Wii's Fluidity game using this easily?
Yep, those kind of 2d metaballs are indeed doable in GLSL - I have a WebGL proof-of-concept lying around. I really struggled to get good performance, though my shader-fu isn't up to much.
Metaballs are too expensive for more than a few particles. There are probably some other algorithms that would work better, or not doing metaballs strictly.
I found metaballs as very efficient when using pixel shader. I did port my js fluid simulation to C++ and used cocos2dx with shaders to do it for iphone. Works good.
Edit: here's a video showing the technique: http://vimeo.com/4391370