If you have Flash MX it now allows for direct import of external jp and also mov files, so yes...you can use a flash file and bring in mov movies now.
In the past we used a mov to swf converter (which you can find anywhere using goodle) and it would take each frame of a mov movie and convert it into single frame in an actual flash movie. This is great if you want real control over the movie (fast forward, rewind, stop, etc)...it just takes a lot more time to compile and template out, etc.
We have been using video in flash for about a year and a half now in our video oriented games. We recently pulled them after getting a notice from that Arcacia company, but once that blows over we will be relreasing them again.
Good luck...more and more flash is becoming the standard in online interactive content!
Paul M. Games
President
Adult Web Games
Straight, Gay, Hentai, Multiplayer and now French Version Games too!