This SWF computes the rectangular bounding (aabb) of a quadric beziercurve. This is usefull to pretest object intersections in e.g. physics engines.

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What do you mean by “pretest intersections” ?
Do you mean you first check if bounding boxes are intersecting before further calculations?

Point 1 is where point 0 and point 2 will intersect if not bound by curvature? what are the rules for which p0 and p2 are bound?

He means that you could use the bounding box to see if intersection calculations are needed. Because intersecting the beziercurve would cost more processing power than calculating intersection on a box.