It just embeds it into the Flash animation though, it doesn't create a vector animation out of it although you can have Flash animation around it. So to get Vegas into Flash just export as AVI then import into Flash (not that you really gain anything).
I'd like to have Flash export and not only import. Also, the scaling of imported Flash doesn't work as it's supposed to do, but Sony is working on that. Flash video is not vector graphics but a highly compressed video able to play on any computer with the Flash Player installed. If you take a look at Wildform.com you'll find "Flix Pro" which makes Flash video from AVI (and I guess Macromedia Flash also do this). The thing with Wildform that I like is that it can actually make vector video files from AVI. It works as in Illustrator or Streamline - bring in the pic/vid and the software will detect edges and colours and build vectors from it. Pretty coooool. Especially since you can play the vector video full screen.
Best/Tommy