There is some validity in that argument, moreso if Flash were incorporated transparently in the browser, but I think people would notice if certain applications worked well and others didn't. They might not blame Flash directly, but they would blame the application.

I would be totally down with Apple refusing to make Flash an integral part of the browser, requiring the user to explicitly and individually approve Flash applets in the browser. But their position is waaay beyond that.

Regardless, you have a point.