The flex _framework_ does not really add too much to game development.
The flex builder tool provides better access for working with actionscript 3, which is where game development on flash (beyond the basics) is really at.
With regards to the specifics:
1. there are a load of physics/maths classes in actionscript out there that would provide a good base for an engine if you want to roll your own. Probably, you could tailor an existing engine if you want...
2. your can create sprites/art in code. Or you can use images, and (pre) embed or load them into your application. One way to do the latter is to tie an xml list up with an image asset, and use this as the basis for loading your assets.
3. With actionscript 3, you can achieve movement and interaction in a much richer way than the frame linking approach you described. To get an insight into how this works, and a good overview on the subject, I would search for "actionscript 3" and "games".