I'm describing here how to create files for progressive streaming for Flash 9 and higher with the help of Sony Vegas Pro 8.0c and ffmpeg. The goal is not to re-compress the files to FLV but perform MPEG4 streaming directly with files created by Vegas. In order to be able to stream MPEG4 files one needs to move the MOOV atom of the MPEG4 file to the start of the file. This is done by qt-faststart.c which is part of ffmpeg. Here are compiled versions for Linux and Windows XP:
An example is the trailer for my short film: My Friend Helen or the video clips at the department of Electronics and Electrical Engineering (click on the video clips tab).