This is an argument that I have had towards this proposal, what do you think
The way a flash player operates is that when it is loaded from a server through a browser, it is locally stored in the temporary internet files. This is how flash streaming and playing works. The movie you see in the browser is not directly from the server, it is the local copy stored in the cache.
When dynamically loading the data into a master SWF movie, if the master file is opened from the local machine (or the cache), it will still load in the sub-content it requires from the server. This is because the master file has not really been 'moved off' the server, it still recognises the server as being its host domain, and therefore loads in any flash content it requires from that specific domain. If this was not the case, then flash would not dynamically load any content at all.