Hmm, I didn't see the 12FPS on the video, other than at the beginning, and I'm sure it was buffering, like others mentioned.
I'm really interested in Flash, especially because there are plenty of games compatible with touch input. I did play some on the PlayBook, and the experience was pretty good, including the sound, which was completely on sync.
Another thing is animations done in Flash. I spent much time on newgrounds.com, and many of the animations can be funny and really entertaining; there's not an HTML 5 substitute for that huge library (and growing), so Flash is also the best alternative for this kind of content.
Finally, sometimes you're more concerned about playing the content rather than looking at it at full quality. An example is reading an article with embedded videos. It's way more convenient to just let them load on the same page while you read than opening them in the YouTube app.
It may be horrendous for many of you, but I'm sure many more people will find it useful.