That explains how they deal with your code, but what are they doing for the Flash Player bits? All of that wasn't written in ActionScript, right?
For example, if your app needs to play a video, where is the video player coming from? If it's Adobe's own, doesn't that mean Flash-equivalent bits are going to be in every compiled app? In that case, and this would be consistent with what they're saying, the main reason for this AOT compilation instead of JIT is apparently to comply with Apple's legal terms.
They're probably using a similar strategy to Alchemy: map AS3 library calls to a Flash framework implemented in the target language. (In Alchemy's case Scott Petersen implemented a C VM in AS3, linked with the C std lib.) Most likely the entire framework is being bundled with every release, without regard to dependency.
Thanks robc and ed. In that case, I don't think this is as impressive from a technical perspective as some people thought. Again, this AOT compiler is not what made Flash apps technically possible on the iPhone; Adobe could've used this same bundling technique with the JIT compiler. It looks like they've done this just to satisfy Apple's terms.
For example, if your app needs to play a video, where is the video player coming from? If it's Adobe's own, doesn't that mean Flash-equivalent bits are going to be in every compiled app? In that case, and this would be consistent with what they're saying, the main reason for this AOT compilation instead of JIT is apparently to comply with Apple's legal terms.