I've used PriadoBlender. You guys are right that it just bundles the php.exe with your script. As far as I can tell, It uses the Turck-MMcache encoder to do this, which means the mmcache.dll needs to be distributed with the .exe.
There used to be a similar project to Priado, but it got discontinued. There is also Alan Knowles work, but that is certainly not easy to use. Priado is still active, and is supposed to have a new release soon.
and yes, you can create a PHP-GTK application with priado. Here's one you can download and tryout, which I created for my brother's work:
http://www.josheli.com/john/airparts.zip
This particular app uses embedded sqlite for a database. Priado does not work with PHP5 (which has Sqlite by default), so i had to include the php_sqlite.dll.
Also, to use PHP-GTK, you need to include all the libraries and .dll files that it requires.
So my simple application directory ended up at around 9.5 mb total.
What i did, was to develop normally with includes and requires and the like, then wrote a "pre-processor" script to "compile" my .php scripts into one big .php script, which was then "compiled" with priadoblender. All the pre-processor did was scan files for includes, and when it found them, include that code where the "include" is. It also removed comments/whitespace and tried to search and remove unused functions.
There are several scripts already out there that will do this. Here's one:
http://alex.kazik.de/twister.html
The priado website is a bit misleading when it says the .exe is "standalone", because it requires some supporting .dlls and of course the .ini file.
Another drawback is that if I distribute 5 Priado/PHP-GTK "executable" applications, then users will have 5 of everything (mmcache.dll, *gtk.dll, php_sqlite.dll, etc.), unless you can figure out a way to test the users PC for already installed libraries and use those.
oh, one other thing... i've also combined priado with Nanoweb, a pure PHP standalone webserver to create "distributed desktop web applications".
hth.