Remeber the most recent Yahoo! Mail's XSS vulnerabilities, or the MySpace worm? I just read through a well written summary on Web Application Worms by Jeremiah Grossman, from WhiteHat Security, "Cross-Site Scripting Worms and Viruses - The Impending Threat and the Best Defense", an excerpt:

"Samy, the author of the worm, was on a mission to be famous, and as such the payload was relatively benign. But consider what he might have done with control of over one million Web browsers and the gigabits of bandwidth at their disposal--browsers that were also potentially logged-in to Google, Yahoo, Microsoft Passport, eBay, web banks, stock brokerages, blogs, message boards, or any other web-based applications. It’s critical that we begin to understand the magnitude of the risk associated with XSS malware and the ways that companies can defend themselves and their users. Especially when the malware originates from trusted websites and aggressive authors. In this white paper we will provide an overview of XSS; define XSS worms; and examine propagation methods, infection rates, and potential impact. Most importantly, we will outline immediate steps enterprises can take to defend their websites."

It provides an overview of Cross-Site Scripting (XSS), Methods of Propagation, comments on the First XSS Worm, a worst case scenario, and of course protection methods, nice graphs and overview of this emerging trend. In my "Future Trends of Malware" research I indeed pointed out on its emergence :

The link for this article located at Dancho Danchev is no longer available.