1. A hardware-based policy engine to manage traffic over a computer network, comprising: an input data path to receive packets of network traffic constituting at least one stream; means for providing at least a portion of each stream to a host processor executing a policy-based software application and for receiving from the host processor at least one action specification associated with said each stream; means for maintaining a policy binding database based on the at least one action specification received from the policy application processor; at least one action processor configured to act on the packets of network traffic; and a stream classifier that determines an association of each packet with at least one action processor based on data in the packet that uniquely identifies the stream to which the packet belongs, the classification determination being made in cooperation with the policy-binding database and without the involvement of the host processor wherein the at least one action processor acts on the packets of network traffic based on the classification association determined by the stream classifier.