you can create bitmapdata objects of 4095 * 4095 if you use flash player 10
There is also the BitmapDataUnlimited option... with a word of caution. Anything past what Flash Player supports natively impacts performance heavily.
I would recommend the 'chicklet' approach (a la Google Maps) for super-scale image handling. With regard to the other comment - Flash Player 10 is not constrained to 4096 x 4096 but rather a maximum pixel count. So, your images can be very long or tall... but not both.
You're right, the size limit is up to 4095*4095 pixels