I am using Flash CS5 as an AS2 and player 7 SWF output.
I have a interface that needs to change to another language while the system still matches the users locale.
The STRING panel has a "Stage language' combobox that allow me to change this during development.
I have a 30 plus languages that are going to be using a series of Flash templates I am making for non-programming movie developers.
I am setting it up to use internal language selector and hiding that in other uses and have external language selection change the language (Director, Authorware, other programs).
(I will one day go to AS3 when I automate the development process for them)
you have to encode that yourself. i'm not aware of any shortcut.
that said, there are more and less efficient ways to do this. i would recommend loading using xml files for each language. load the appropriate xml file and then use an object to generate the desired language string from a master key.