In the old motion model it was as easy as highlighting all of the frames, converting them to keyframes then removing the tween. But I have no clue how to do it with the new motion model.
"For whatever reason it converts the tween to frame by frame."
Flash does this because Flash CS3 doesn't know anything about the new motion spans. So this is the way your animation can be displayed in an older version of Flash.
(And it's why we added the feature to right-click a frame and convert to frame-by-frame animation - same operation, but allows you to do it for a single span instead of all spans across the entire document).