can this sort of stuff be done in flash?
it was done in flash so yes, it can be done in flash.
what sort of should i look for in this kind of cursor behaviours? ideally what i want to do is have the mouse break a series of images that are formed in a square together but when the mouse is not near it springs back
you should check flocking behaviors though that looks less sophisticated than flocking where the cursor acts as a predator invading the flock.
i agree: there's some good stuff out there using flash.