I can't find details on the film yet, but here is what is being reported:
A number of protesters managed to climb atop the walls surrounding the embassy, while others were able to breach the embassy's garden, where they removed an American flag and replaced it with another one bearing the Islamic declaration of faith: "There is no God but Allah and Mohammed is the Prophet of Allah."
The Ultras White Knights – hardcore football fans – claimed that members of their group had brought down the US flag. While group members have since retreated from the scene, they say they are planning additional rallies to protest the film.
Many of the more Islamist-leaning protesters had answered calls by Salafist leader Wesam Abdel-Wareth – who is also the president of Egypt's ultra-conservative Hekma television channel – to protest the film 'Mohammed's trial' at 5pm outside the US embassy in Cairo's Garden City district.
Abdel-Wareth, for his part, denied that protesters had managed to breach embassy premises, claiming that the American flag had been torched in front – rather than inside – embassy grounds.
The El-Hekma channel's official Facebook page, meanwhile, has posted a photo of a group of young men removing the flag outside the embassy with a comment that reads: "Ultras Zamalek tear the American flag in front of the embassy."
US embassy spokesman David Linfield, for his part, confirmed that protesters had been able to enter the embassy and remove the flag. He went on to deny rumours, however, that shots had been fired at demonstrators or that anyone had been injured or killed.
Protesters carried signs condemning the alleged insults to Prophet Mohammed, while others vowed vengeance. Some protesters demanded the embassy's closure.
"Obama, Obama there are still a billion Osamas," they chanted in reference to slain Al-Qaeda leader Osama Bin Laden.
Other protesters wrote "There is no God but Allah and Mohamed is the Prophet of Allah" on the embassy's main gate, obscuring the sign reading "Embassy of the United States."
"Everyone is here for the Prophet," said protester Osama Abdel-Halim. "Why is it that, in politics, everyone takes to the streets over things like the constitution, but not when the prophet is insulted?"
Protester Mostafa Khallef told Ahram Online: "President Morsi must take steps to prevent the broadcast of this offensive film."
The controversial film is reportedly being produced by US-based Coptic-Christian Egyptians, including Esmat Zaklama and Maurice Sadeq.According to Egypt Independent, the film claims that Mohammed was gay.
Maurice Sadeq, a Coptic lawyer based in the US, announced earlier this week that the US-based 'High Authority of the Coptic State' would broadcast the 13-minute film on Tuesday to commemorate the 12th anniversary of the 9/11 attacks in New York and Washington.
UPDATE: YNet reports that the film - which looks spectacularly bad - was not done by Copts but by an Israeli in America and financed by anti-Islam pastor Terry Jones.
But later news on Wednesday indicates that the filmmaker, "Sam Bacile," is a pseudonym and it is unclear if he has in fact any Israeli or even Jewish connections as he has claimed.