I have written a small program that builds an iCal calendar with all birthdays from the Address Book. See this page for more information on how to use the tool and a download link.
[robg adds: This worked as described; I installed the program in my user's bin folder, and told it to create a new test calendar. I then switched to iCal and used File: Import to bring the new calendar in. I chose to bring it in as a new calendar, though I could have added its events to an existing calendar.]
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