See
http://msdn.microsoft.com/webservices/default.aspx?pull=/library/en-us/dnwse/htm
l/newwse3.asp

It still has a few issues from what I can see:
1) Receiver side can still not stream.  It must read the whole message
first.  So this basically means very large files are still not an option
with WSE MTOM AFAICT.  Sender side can stream however with some funky
XmlWriter deal (real binary stream would be tons easier).
2) "Note   Although MTOM reduces wire size when composed with security, it
does not reduce the processing time either on the client or the server in
order to secure the message. This is because WS-Security requires the data
to be converted to base64 to apply normalization and canonicalization
algorithms and hence generate the cipher values in order to achieve
interoperability. "  So not sure if the processing overhead (at both sides)
will out-weight any wire size savings one would get.

It seems to me like these two things need to be addressed to really realize
MTOMs benifits.  The pipe should not touch the byte stream unless I want it
encrypted and signed.  And why they would base64 encoding it anyway for
signing is beyond me as it would be easier to keep it in bytes the whole
way.  Almost need to expose an attachment stream on both sides so we can
really easily read and write streams in chunks.  For now, it would seem that
some other out-of-band channel is still needed such as httpdownload, ftp,
sockets, etc.