I just came across a paper that might be of worth a read by the techies out there who have interest in spelling correction systems.
It was written by Silviu-Petru Cucerzan and Eric Brill, both are part of Microsoft's Text Mining Search and Navigation Research team.
From the abstract:
Logs of user queries to an internet search engine provide a large amount of implicit and explicit information about language. In this paper, we investigate their use in spelling correction of search queries, a task which poses many additional challenges beyond the traditional spelling correction problem. We present an approach that uses an iterative transformation of the input query strings into other strings that correspond to more and more likely queries according to statistics extracted from internet search query logs.