I've had success with this for almost a year now.
It allows you to define a starting point then width and height to indicate your crop area.
You then send those numbers to your server side image processing script.
You will need to look for something else using flash and/or <canvas> if you really want to create the thumbnails on the client side.
Also the way I use this cropper does not involve Ajax at all. I upload the file through the browser normally then choose from a list of files the one I want to crop.
The only trick then is to send the message back to the outer page that the upload is complete.
That's not so tricky if using pop up windows rather than iframes (I imagine it should be a similar process with iframes)
Have a link on your main page that opens a new window with the form to upload the image. Upload the image without ajax, show the uploaded image to the user with the cropping UI. Submit the numbers of the selected area back to the server to create the actual thumbnail then show a success message to the user while setting values in javascript about the url of the new thumbnail. When the user clicks to close that window you can have the JS variables passed to the parent window then script in that window can insert the thumbnail into that page.