Flash tried for a long time to become the next paradigm in web User Interface design. Over the years there has been loud supporters of Flash technologies in support of this effort. But there has been a larger resistance.

It has failed up to now largely because Flash adds only marginal benefit over HTML and it brakes standard navigation from within a browser. For any added snazziness that Flash provided you got little else along with it. The net was negative.

It has always had a place as a online game platform or as an online rich "creative" [read advertisement] platform. But not as a replacement UI.

But it did accomplish something. It got a high penetration rate: 97% plus.

This has been a crucial factor in its adoption as the now defacto web-video standard. None of the other players whether they be quicktime or windows media player have that adoption rate. Flash allows near ubiquity in one format. This presents the only way currently for unifying a customer experience when viewing a video.

The other benefit that I believe has not been written about as of yet is that with Flash you can design your own player. This is great for any site concerned about their brand, especially for video sharing sites like Revver and of course YouTube. For if someone puts a video from your site on their blog, you can deliver that video from within a branded Flash player. Even to the point of providing some unique navigation elements.

Your brand is proliferated beyond the domain of your site...virally. 

Questions pop into my brain at this point.

Will this be the flash legacy? Will we look back on Flash in 5 years and perceive it primarily as a video delivery technology and not as a game/creative/vector-graphic engine?

I say yes. The benefits it provides to the online delivery of videos cannot be matched by any of the other technologies currently available.It provides ubiquity, customization, easy maintenance, easy share-ability...check, check, check, check.

It is not the first mover in this space, in fact it is quite late to the party, but it has the above stated benefits that provide differentiation that are, in my humble opinion, not beatable by the current set of substitute products.

Will it be able to leverage this capability into a broader control of the web UI space?

Ahh, now this is an interesting question. Flash is in an interesting place. It is almost like it stumbled into this position. It is on the verge of LOCKING up this channel of content delivery. What happens then? Once people are comfortable with pasting an <embed> or an <object> tag on their page, what can flash leverage beyond that...?

Maybe they'll achieve their goal of becoming the Web UI via this route instead of head on. We shall have to wait and see.