its extremely irritating that SGX530/535 gets so little support. PowerVR seems to share very little information about low-level programming. instead everyone has to rely on their low end API's and outdated drivers.
According to TI their OMAP3430 should handle hardware accelerated H.264 decoding in realtime, with the help of the IVA 2+ (...dont know if that is PowerVR related as well)

it seems that most multimediaapp developers have a hard time integrating codecs that take good use of the IVA 2+
its like the N900 performs just a tad bit better for movie playback than the N810 does (with no driver support at all), so it feels like theyve left out the hardware acceleration and only used the "600mhz vs. 400mhz" for improvement... these issues shouldnt exist if PowerVR/IVA2+ would come with proper support for developers.

could this be the reason that Flash10.1 probably isnt coming?

i cant see any reason to not support Flash 10.1, if it isnt because there is insufficient documentation, API's, or the worst case wrongly specified hardware (IVA2+).

the N900 is a device where we are used for experimental releases... so nokia should just release the Flash10.1 experimental edition and it may suffice for now.