Sure, that can happen, but I don't think that's what's happening here. We can agree to disagree on the why. I've shot still and video of fireworks and haven't had this problem. I understand, its a camera in a phone, and does a decent job for what it is, but I think more than a few people have been disappointed by the 5MP camera and HD video exposure quality. I know I was, but I admit, I'm particular when it comes to photography. Much better than any other camera phone I've had, though.
Anyway, here is the video I was referencing in my last post with similar flashing. FF to 4:30.
http://www.youtube.com/watch?v=1Zreto2BhWg