I think what exacerbated the situation was that when RIM announced the development kit for the new playbook, they led with the AIR kit, with no defined date for when they'll get Java on there. Which is probably good news for Flash developers, but doesn't look good if Java is your tool of choice.
Now, while RIM has brutally chopped the price of a dev licence (down to something ridiculous like $5 or $10), and they are giving away the dev kit, the tools you need (from Adobe) cost (if memory serves) about $8-900.
The good news is, if you happen to know what you're doing, you can take your Flash app and use some free command line tools to go and wrap it up. So you don't _need_ to spend that big chunk of change on Adobe products... you can trade off your own misery for it instead.
It seems a really raw deal for the Java devs, but if RIM can replace their lost Java devs with Flash devs they might consider that a decent trade-off.
The top-end Premium version of Flash Builder is indeed $699, but there's a version available for $249 and a perfectly good compiler available for bupkis. Adobe offer completely free Flash Builder licenses for students and unemployed developers. Beyond Adobe there's an excellent open source IDE for Windows (FlashDevelop), a very powerful proprietary IDE (FDT), Eclipse plugins and a TextMate bundle. There are several good free options for AIR developers.
Adobe have really been sweating it over the image of Flash amongst developers. They're still a long way from perfect, but they seem to really be sorting their act out. While they would very much like developers to buy their expensive IDEs, they certainly aren't obstructing competition. It would be nice if AIR went open source along with the Flex/Flash core SDK, but compared to Apple it's a very open platform.
Even on with Objective-C on iOS there are a bunch of tricks you have to employ to keep things running smoothly, and if you're not careful you can still end up writing fairly poorly performing apps. I can only imagine this being much, much more difficult if you're working with Flash.