Java is bytecode compiled but in use actually runs faster than native C/C++ code in many cases (the runtime optimizes slow code as it goes). Burns a bit of RAM but the iPhone has loads of RAM anyway.
128MB or 256MB is loads? Actual free memory is probably what, 40-80MB?
No, you are. The SWF specification is publicly available as an open standard that everybody can implement:
http://www.adobe.com/devnet/swf/
Try getting something like that from Apple for -any- of their technologies.
Open standard, or open source? Two different things. Jobs referred to 'open source', while Adobe guy countered with 'open standard' and 'cross platform' to infer they're the same thing, which is purposely misleading in the context of any reply to Jobs.
To take your challenge - how's about Webkit? Open source, not just open standard.