Great little plugin, particularly for adding (non-YouTube) video to sidebars.
I have a simple suggestion for non-Flash browsers (eg iPads etc).
Use the optional Initial Image as a background for the video. (eg for the widget version, use it as a background for the SWF_put_widget_evh div).
This could be optional.
It's a very simple means of displaying something non-Flash browsers, rather than a blank box.