TagCloud
I've been tinkering around with the TagCloud that is linked to on the right side of this page (see the Feeds section). Rather than fumble around trying to describe how TagCloud works, let me offer a description from the DRM Blog about their TagCloud:
The box that you see below contains a TagCloud for DRM news and articles. The service will grab any RSS feeds from Yahoo! News that you tell it to use. In this case we found a bunch of DRM related sites to use. TagCloud then caches those feeds locally in the TagCloud database. These feeds are then fed into Yahoo's content analysis service to extract the keywords. The Yahoo service returns a set of keywords (tags) that the article is associated with. The tags are stored on the TagCloud server and a script determines which keywords are most important (occur most often). We use CSS to change the size and color of the tags that are most important. Finally, the tags themselves are links to the TagCloud page that contains a list of articles associated with that keyword.
In the case of my TagCloud, I've added all the blogs/feeds I follow (via my Bloglines account) that have something to do with librarianship (I'd guess that's over 100 different blogs). I haven't tinkered with the layout or formatting of my TagCloud, though; instead, the link just sends you over to the TagCloud site where you can view it.