Adobe has poured alot of resources into the Flash platform over the past few years, but most of the enhancements have been around video. Most of us Flash Developers will tell you we feel a little peeved that some areas have been overlooked... I know there has been a bug I've been tracking for over two years with Adobe that stops me using the SoundMixer class in any of my apps. This added competition of HTML5 is only going to be a good thing as it will make Adobe concentrate on all areas of the platform. Thats why I get frustrated that the only discussion is always around the damn video tag!
Apple is part of the group that owns the h.264 patents. They will make money from anyone who licenses it. This is why it is important for them to stop other codecs being available on their devices. If content providers decide to use a app instead of a website to publish their content on the iPhone/iPad Apple could very easily just deduct the licensing costs from the money received from the app store (Free apps are covered as free content).
This will force the owners of H264 to either create a fair price for the codec in 2016, or they will become irrelevant like RealPlayer, etc.
Theora is a generation older than H.264. There are features in H.264 that help compression that aren't in Theora, plus Theora has a few other problems (e.g. motion vectors no longer than 16 pixels). So a good H.264 encoder is always going to beat a good Theora encoder. Perhaps they'll be able to create a truly excellent Theora encoder that will mitigate the format's deficiencies as much as possible, and outperform the majority of H.264 encoders, but I wouldn't bet on it. The open-source x264 encoder is already very good, and is only going to get better. And the increasing use of H.264 for TV broadcast and Blu-ray surely means that there's going to be strong competition amongst the vendors of commercial H.264 encoders.
...that said, I think you are right.