I disagree,
Just look at flash for WebOs, its been delayed indefinitely, early reports were that it consumed the cpu, sucked down the battery and was causing the phone to reboot/reset.
Why in the world would apple want to introduce a product that would make it an unstable device?
I'd say that its not apple playing chicken but rather protecting its products from buggy, inferior software that will detract from the user experience and also increase the volume of support. If something stops working on the iPhone, they'll be call apple first, not adobe, even though flash would be the culprit.
btw, flash for the android platform seems to be delayed significantly as well. Looks like adobe is firing on all cylinders