Flash objects can be embedded in widgets, per the instructions here: http://developer.newsgator.com/wiki/index.php?title=Embedding_Flash_In_Widgets
One thing you may note is that in the example we give, the wmode (windows mode) is set to transparent. We suggest this as a best practice for most cases. Why? Other HTML elements on the page may render behind the Flash movie (like a JavaScript drop-down menu). Since, by default, browsers will place the embedded content on the top-most layer, setting the wmode to transparent will ensure that the flash movie won't hide things.
If for some reason your Flash movie must have an opaque background (transparent mode may slow performance in some cases), you can use CSS to arrange the elements in your widget to show in the proper layers. Here is more information: http://capcai.indorelation.com/blog/index.php/2006/02/22/flash-behind-html/
And to understand each windows mode more clearly, here is a simple example of each type: http://www.communitymx.com/content/source/E5141/wmodeopaque.htm
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