Yeah, this is a sneaky underhanded move from Apple, and despite good points (The flash compiler is a piece of shit and/or Adobe blows!) it still reeks of them throwing their weight around as the dominant smartphone platform to try to hurt Adobe.
This is why, even though I love the changes iPhone OS 4.0 gives us, I'm probably done with the iPhone as soon as my 3GS dies. It's taken 3+ years to get access to features that have been possible since months after the platform came out (Jailbreaking), and we're still subject to the whims of Apple.
If Adobe was really serious, they'd eliminate support for all their Software on all Apple platforms. We can only hope that they do, which in a perfect world, would eliminate Flash as a dominant standard AND take Apple down a peg or two. One can hope.