I really thought that full-screen Flash disasters have nothing to do with nVidia and everything to do with this:
Another important note: Compiz and GPU-accelerated Flash on Linux do not mix. The Flash Player still works if you have Compiz as your window manager; you just won't be able to make use of GPU-accelerated features. This is a shame since Compiz is coming with the basic installation of various Linux distributions. Unfortunately, things get unstable when trying to do GPU acceleration in SWFs running under Compiz.
In other words, Flash actively tries to detect if Compiz is running, and, if it's running, it disables all OpenGL acceleration
, needed to scale your Flash Video data to screen. You are doing all the scaling in software, and that's why you have such craptastic performance. I tried the theory with my old GeForce FX 5500 and it's true: with Compiz it's UNBEARABLY SLOW, but with KWin the speed is more than acceptable.