Jay,
I guess there are really two parts of this task. 1) get the file to a server that is accessible to IS 2) process the file.
The custom content handler approach would help with #1 assuming you want to use the built-in webMethods FTP server. If you use the standard IS FTP process to process large files, you will quickly fill up available memory in your server and die an ugly death.
You could accomplish objective #2 using the flat-file processor once the file had been streamed to a temporary location on the file system or you could parse out the header and trailer records in your content handler if your java skills were up to the task.
Mark
#Integration-Server-and-ESB#webMethods#Flow-and-Java-services