That is interesting that they're using Vimeo. Sony used to own grouper.com didn't they? But now that redirects to crackle.com Maybe they'll buy Vimeo? I expect the general video hosting market will consolidate into YouTube plus a couple of other major players. Quite a few have already fallen by the wayside.
Yes, Vimeo does re-encode everything to FLV. You can submit in everything from WMV, MPG2, MP4, etc., they re-encode to FLV, in HD if that was what you submitted in. I love em. The trailer for our newest film, "Ready? OK!", edited entirely in Vegas 8 Pro, is hosted on Vimeo at www.vimeo.com/927437
Quite surprising that a big company would use a free video-sharing type site instead of simply serving the flv from their own servers. And the video looks like it was done in Adobe After Effects, not their own software ... seems odd, since as a video producer the video has me thinking "how was that produced?" and the answer is a competitor's software product, AE. Nice looking video though. It could've been conceivably created in Vegas, with a lot of hours of track motion work though. Seems like it would do more to sell me on buying AE than any of the product/hero boxshots.