Well, I can certainly tell you that nobody warned ME that the hundreds of hours I spent developing in MonoTouch and Unity3D were about to become wasted. (And there there are MANY, MANY applications in the app store using this frameworks). Flash is not the only framework hit by this unnecessarily broad restrictions in the new TOS.
But what about MonoTouch? Unity3D? The new TOS are hard on developers and restrict them to certain languages. Language diversity is good. Freedom to use your own coding style in your own language is good.
It doesn't matter how the apps are developed--Apple still has the key to the gate with the app store certificates. What Flash would have bypassed was the Macintosh and Apple development tool chain.
What I'm far more unhappy about is that Apple also banned other popular frameworks (like MonoTouch and Unity3D) with this clause that use the Apple tool chain, and potentiality even all development SDKs (like Blackboard's education SDK and RedLaser's barcode scanning SDK.