Adobe Livedoc (see here) indicates that you can pass flashvars in different ways through the URL or the flashvar object. I am using Flash Player 10 on Mozilla browser and it seems that the current player doesn’t work as explained.

It seems that there is only one way to pass the flash vars when using the template page that Flex builder 3.0 generates. You need to set it in the src under the javascript tag:

AC_FL_RunContent(
			"src", "${swf}?myName=Elad",
			"width", "${width}",
			"height", "${height}",
			"align", "middle",
			"id", "${application}",
			"quality", "high",
			"bgcolor", "${bgcolor}",
			"name", "${application}",
			"allowScriptAccess","sameDomain",
			"type", "application/x-shockwave-flash",
			"pluginspage", "http://www.adobe.com/go/getflashplayer"
	);

You can then easily read it in your Flex application:

var myName:String = mx.core.Application.application.parameters.myName;

I tested all the other options and nothing else seems to work. I also notices some other posts talking about the same issue, such as here:
http://flexblog.faratasystems.com/?m=200610

This issue may be related to the way the swf is deployed, in any case, I couldn’t get the examples from the livedoc to work. Remember to make the changes in the html-template folder so it will generate your template automatically every time you clean your project.

If anyone have more information, feel free to post it here.