Like many of your other arguments, this one is also of the type "Steve told me this". How much source code of flash applications did you see, how well do you know flash and can you make a decision for yourself if it's bad code or not?
How do you expect anyone to know anything if you can't trust the company that says it, are we going to take Adobe's word over Apple? That flash will run fine on the iPhone?. I've seen none of the source code, but it makes sense that translating one language from another will cause problems, I never said they didn't have any ulterior motives, just merely that what he said is a valid concern, and also my other two points about flash. SJ's didn't just say: "Translating Flash to an iPhone app will produce poor code", he said that it's proven or well known that a program that translates code from one language to another produces poor or poorer quality code.
You really are just blindly listening to what they tell you, buying into their marketing and story telling, and not allowing yourself to consider even a little bit that they might have ulterior motive for what they are doing.
No, I'm not, when I'm told something, I weigh it up, if it makes sense, then I'll believe it.
Personally, I'd be offended by such a statement if I were a flash developer.

You can rationalize their practices all you want and describe them as "protection" of users and such, but the truth is, it is censorship, plain and simple. And I can't think of a single example in history where censorship ended well.
It is censorship, but they have valid reasons for doing so.