I tried to play the demo videos on my Samsung Galaxy S II (Android 2.3.5), both with Dolphin Browser v8.8.2 and the stock web browser, but it doesn't seem to work in either of them.
Same here. It does not work in the stock Android browser or in Chorme, but it plays in Opera Mobile. It seems like a very basic oversight. I suspect this is the reason YouTube is so dominant: It works reliably everywhere.
http://flowplayer.github.com/demo/seek/
This is for upcoming 5.0.1 version.