In flash player 9 and below there was a problem with the object's z-index if the wmode was set to window.
When this option is set to transparent, it fixes the z-index issue, but messes up the keyboard layout and mouse wheel events in flash object.
Flash player 10.1 fixes the keyboard layout issue.
Setting wmode to opaque keeps the mouse wheel functionality and z-index of absolute elements on the page, but only if you set the background color for the element!
Having a transparent background (or setting the opacity attribute in CSS) (still) does not solve the issue.