Perfect? Come on people take off those Nokia glasses. Sometimes it's almost smooth (compared to windows desktop flash not Linux). There is couple of threads here you can see people talking about low quality of YouTube vids. To me it sometimes look as they have optimized flash so that they have disabled so-called anti-aliasing(you can find it on windows with right-click menu)

And then again Vimeo videos are laggy. Still they have screencap of Vimeo webpage on their official N900 page.

it works but imho it's not perfect. I would be disappointed if someone said that it works perfectly with flash.