I'm fully aware of the language limitations. I mentioned that much on my very first post on this thread, if you care to go back and read it. But here we are discussing something different. Apple had an unspoken commitment to CS5 that lead many people to believe Flash would be available on all the iFarts (iPhone, iPad, iComethNext).
Now, another thing entirely, that you perhaps are confusing with this, is that with the release of the new SDK, they have changed their policy on 3rd party middleware. From now, the only languages they approve on their app store for the mobile devices, ie phones and ipods are: C, C++, and Objective-C, and only Apple frameworks, no interpreted languages. Now, if by chance someone made a Flash to C converter, that will of course be affected, but that can only be good lol.