The difflib code which I took from phpwiki can be used for stream based diffs (in fact, we do that: we first use a line based diff to figure out the lines to present, and then we do a word based diff on those lines in order to mark the changed words red.)
The code works as follows (see http://cvs.sourceforge.net/cgi-bin/viewcvs.cgi/wikipedia/phpwiki/fpw/difflib...):
The main workhorse is the Diff class. You construct it with two arrays of strings that you want to compare. You then get a list $this->edits; this is a list of _DiffOp's which describe how to get from the first array of strings to the second array of strings with a minimal number of changes. With that, you can do whatever you want. Normally, you'd pass such an Diff object to a DiffFormater (which you should extend), which then looks at the edits list and produces some output.
Currently, we cut the two article version into lines, pass those two arrays to Diff, then to TableDiffFormatter for presenting in a table. This TableDiffformatter, when printing out changed lines, calls a WordLevedDiff (which extends Diff) to color changed words in red.
It might be nice to change TableDiffFormatter to produce side-by-side output, similar to what the sourceforge cvs viewer does.
Axel