I feel like I've just jumped back 13 years.
I got 78.2 FPS on 'timedemo demo1', on an i7 920 @ 3600MHz, Flash 10.0.32.18, Firefox 3.5.5, Windows 7 Ultimate 64-bit. It was perfectly smooth. The audio lag (~200ms) seems more likely an architectural latency issue than a performance-related one.
It might have a lower frame rate due to running in Chrome, I don't know. I leave Flash disabled in other browsers due to frequent crashing.
The biggest bottleneck is rendering. When displaying flash content, your cpu has to render every pixel of every frame. The flash player vector capabilities are pretty extensive. Supporting image rotations, resizes and alpha transparency can require multiple cpu passes.
The obvious answer to this problem is GPU rendering. Adobe has made some efforts in this direction, but it doesn't look like it will happen any time soon. There are many issues that make this transition difficult. Backwards compatibility, cross platform compatibility, and reliability are a few that come to mind.
Rendering is the bigger performance culprit, anyway.
