The only workaround I know for that is copy&paste file contents directly into your app, using some text editing component.
... and nonsense one: build small AIR app which will pass selected file contents to the browser via local connection.
AND totally crazy way
1. Load file content using Java applet http://www.captain.at/programming/java/
Beware! But you'll need a sertificate for your signed Java applet accepted by the user in order to access local file system.
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FileReference can do that, but you need to target FP10 and the action must
be user instantiated (click on a button)
you are right Michael, thanks for the correct info