It definitely has to do with the Debug version of flash player (I just confirmed that it works correctly since I installed the debug version on one of the computers)!
I still have no idea why this is the case... The only use I knew of for debug version of flash player was for trace statements - obviously there is a bit more going on. (I don't even think I have trace statements in this portion of code, though I will check shortly).
So what else does the debug version have over the standard install?
In my previouse observetions I had similiar situation happend when there was exception in the application (Error) which raised a havoc and never was realized by end user visualy, screen was just frozen , (partially) thats because non debug versions of FP do not display exceptions popup, and some times they expose semi freezing non functional behaviour.
most obviouse would be security Exceptions
It appears it is a security exception - thanks!