There were a lot of announcements today about features that will be in the update to the Flash Player, code-named Moviestar. The most interesting of these features was H.264, but also included are AAC playback and many hardware acceleration optimizations for video rendering in general.
You may be wondering when you will be able to use these features in AIR. As Mike Downey mentioned in his keynote at the onAIR Bus Tour event in DC, we will be releasing a new beta of AIR at MAX
which will contain all of these features announced today.
Update: Looks like I jumped the gun on this a little bit. The H.264 feature will not be in AIR until a post MAX release, but will definitely be in AIR 1.0.