Many QVGA phones and MP3 players do include a Flash player, so I don't think these issues are insurmountable for our larger-screened targets, if somebody were to take an interest in doing so. There are plenty of Flash apps written for 320x240 screens, but I wouldn't expect to find many written for a smaller screen, if any at all.
Speed is a valid concern - even on a relatively high-powered device like the Cowon D2 the performance of the OF's Flash player is poor for all but the simplest games.