Justin Silverton has posted about a method he's found to create a self-extracting PHP script for your application:
PHP has a built-in command called __HALT_COMPILER__. This command Halts the execution of the compiler. This can be useful to embed data in PHP scripts. Below is an example of a self-extracting php script. When executed, a second php file will be extracted in the same directory called testscript1.php.
The post includes the code and a brief explaination of how it works.