Ever since I got my hands on .NET 2.0 I noticed the handler webresource.axd which seemed to provide a similar function as what I was using handlers for. 

I used handlers in .NET 1.1 and before today also in .NET 2.0 to handle my javascript and css that I need in controls I developped.
I mark them before compiling as embedded resource and then later on read them out via reflection and they get served up by the browser.

I probably don’t have to explain that (as long as your parameters don’t change) this scripts get cached by the browser so they will only be downloaded once and re-used afterwards.

Well in asp.NET 2.0 there is a feature that uses webresource.axd to handle all kinds of embedded resources (images, pages, etc…)

Nikhil Kothari has a post on how to use them in his blog, and I just copy pasted the text below.

Using Web Resources
Imagine I am writing an HtmlEditor control and I want to use a stock bold button icon. Here’s what I’d do:

1. Embed “Bold.gif” as a resource with the same name into my control’s assembly.

2. Mark it as Web-accessible via the attribute:
       [assembly: WebResource("Bold.gif", ContentType.ImageGif)]

3. Use the GetWebResourceUrl() method on Page to get a URL that can be rendered out to the client.
       boldButton.ImageUrl = Page.GetWebResourceUrl(typeof(HtmlEditor), "Bold.gif");

This results in a URL of the form:
    WebResource.axd?a=MyControls&r;=Bold.gif&t;=632059604175183419