I stayed up till 5:30 this morning because the video and swftools developers are sadistic bastards. It seems unlikely that they could have implemented modules with more settings than these two modules together share and less likely still, that the two modules could have less of a seamless interaction. I shake my fist at their broad vision of video for everyone! As usual, part of the difficulty had to do with my ignorance, but I have no qualms blaming others for my stupidity. "Damn you developers!"
My problem arose when a friend prematurely asked me to make the video work on a site, The Weave I setup for him. He had started uploading video rather than embedding. My plan had been to implement a full video solution for the site to wean the organization off of proprietary networks and have them control the rights to their own data. Why must idealism be such a pain in the ass? Enough digression.
After setting up the video module and deciding that ffmpeg would pretty much fail to accomplish the necessary transcoding without some serious intervention, I gave up and just used the video module as a way to upload content and create video thumbnails. The module does a great job of this, and I'm glad I had the chance to work with it. Next, I decided that the swftools module could help integrate a player since html5 was a no go. Maybe I was right, but the dear php gods had other ideas. After a couple of hours poking around trying different configurations through the web UI, here's what ended up working to get the classic flowplayer to wrap the videos:
This is probably a bug, but for previously uploaded content I was not getting any thumbnails generated for the videos. The easy solution turned out to set a default thumbnail under the Video Image field in the content type. Once this was set, the video module thumbnail settings worked perfectly. Whew!