I was recently working on the new website for DIP HR Consultants in Antwerp (not yet live). The site has some Flash elements on the frontpage & we had problems validating the page.
Of course I’m lazy & I just inserted the .swf movie using the “Insert Flash Here”-button in Dreamweaver (hey, I told you I am lazy). The code generated by Dreamweaver to do this is, of course, impossible to validate.
Here is an interesting article on how to approach the problem of Flash embedding using Webstandards.