Flash Player 9 Update 3 Beta 2 (up tonight) will include H.264 support. You can get tech details from Tinic Uro. He also sneaked in a fix for an MP3 bug that was annoying me:
Flash Player Update 3 Beta 2 now can play back any MP3 sampling rate leveraging the same code I implemented for AAC. No more chipmunks. Ever. Err, this is actually kind of major as I have seen complaints about this bug for years :-)
What does this mean? Video files on YouTube will look better for the same file size. Also I won't have to transcode MP3 files to get Flash to play them. Give it 3 months to get 90% penetration...