In this thread we are talking about buffering, not decoding video, all the tests must be done with video paused (only buffering). In this scenario hardware or software decoding doesn't matter. The reason why the youtube example must be tested with 720p enabled is because youtube.com site only buffers at max speed when a HD resolution is chosen.
The main problem with flash player and buffering video is that it requires too much CPU for that simple process. The better the connection speed (broadband 20 Mbits or better) the worse this problem is reflected. And with a single core CPU is simply a nightmare, completely unusable.
In conclusion, Adobe should test Flash Player with old CPUs, not i7 quad cores.