I tried the SWFobject with my application, which has input text fields where the Hebrew font is embedded (David font, or Arial font - all the same). It turns out that the letters are not the letters I enter. In fact, it seems as if the ascii table was entirely shifted. Different letters are in different places on the keyboard, other letters can't be reaced at all.
It is not related to the swf compilation, since the same swf works fine with the usual 'Object' code. So I guess it is related somehow to the access to the Font n the system.
I also guess it might be the same with other languages... My OS is French, so its natural ASCII table is French.
As SWFObject only embeds you flash content on the page (and essentially writes exactly the same code as a object/embed once rendered to the page), I don't think that it is the issue.
I'd have a look at the HTML document character set being defined on your page:
Also - Are you sure you have actually embedded the required characters inside your flash file? (selecting a dynamic/input textfield > properties panel > embed > (select the characters you want included))
I am having the same problem with Greek. When I use the classic Adobe solution ( AC_FL_RunContent ) everything is ok. When I browse directly to the swfs everything is ok. When I am using SWFobject the text fields (actually I use the TextInput component), I can't input Greek to the fields. You can see the effect at www.starstyle.gr Is it a font embeding problem?