I would say progressive would be the best way, so that this way it would cause less strain and work on the server side.

Hello Dan,

There are several AVI editing and Flash editing programs that install a watermark to the video, yet Im afraid this watermark would be seen in the video playing also.

Many other companies use a different approach streaming flash video content example given is using in conjuction with a flash media server, which is not cheap as far as licensing from adobe to say the least. 

The best way I ahve found is to make a flash player using CS profession, sothink, really whatever and load the flash content in pieces from many different file locations, In for instance a FLV format which most flash supports.  Most normal users would not be able to use the files. or edit them without 1000 dollar software, which not many people have, and with it loading in parts, by the time they track down all the parts of the FLV files then try to compile them together into one movie, basically its not worth the hassle just to use someone elses content.

Hope this helps