The progressive delivery does do pseudo-streaming. Scene7 enables concurrent playback while downloading the file. So, you don't have to wait for the entire file to download before you can begin viewing the video.
Progressive video is stored in our file server, but delivered through Image Server which sets the appropriate headers. Following is an example of the headers that ImageServer sends back for video progressive delivery. The accept-ranges header is what enables the concurrent playback:
HTTP/1.1 200 OK
Expires Fri, 13 Sep 2013 20:56:49 GMT
Cache-Control max-age=0, no-cache, no-store
Date Fri, 13 Sep 2013 20:56:49 GMT