The introduction of a powerful new microwave source, the free-electron laser, provides new opportunities for novel heating and current-drive schemes to be used in toroidal fusion devices. This high-power, pulsed source has a number of technical advantages for these applications, and its use is predicted to lead to improved current-drive efficiencies and opacities in reactor-grade fusion plasmas in specific cases. The Microwave Tokamak Experiment at the Lawrence Livermore National Laboratory will provide a test for some of these new heating and current-drive schemes. Although the motivation for much of this research has derived from the application of a free-electron laser to the heating of a tokamak plasma at a frequency near the electron cyclotron frequency, the underlying physics, i.e., the highly nonlinear interaction of an intense, pulsed, coherent electromagnetic wave with an electron in a magnetized plasma including relativistic effects, is of general interest. Other relevant applications include ionospheric modification by radio-frequency waves, high-energy electron accelerators, and the propagation of intense, pulsed electromagnetic waves in space and astrophysical plasmas. This review reports recent theoretical progress in the analysis and computer simulation of the absorption and current drive produced by intense pulses, and of the possible complications that may arise, e.g., parametric instabilities, nonlinear self-focusing, trapped-particle sideband instability, and instabilities of the heated plasma.