Wow that's some awesome news. Just a few hours ago I thought how nice it would be if Flash would support H.264. And there it is! :)
The compression ratio of the lossless codec (Screen Video/Screenshare) is sorta bad, Sorenson Spark (a H.263 bastard) looks really bad and VP6 is a major pain to get working (and it isn't really all that great). H.264 (2pass), however, works really well for screencasts. You get very good compression and almost perfect looks. It's currently the best choice for the last mile.
If they would also add Speex support and subtitles it would be perfect. ;)
See also:
News on heise.de (German)
Edit:
HE-AAC does work very well for narration. 12Kbits/16khz/mono is acceptable if you filter out the static noise beforehand (eg with Audacity). The quality is pretty close to Speex. With Ogg Vorbis you need a bitrate, which is at least 50% higher and the result is barely acceptable.
Edit2:
There are subtitles as well! Awesome! :D
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