No, you are pretty much right on. The download speed is related to the video bitrate, NOT file size.
Unless your Web host has some file size limits, the video file size is not nearly as important as the bitrate.
A 6MB file could be 20 seconds long or 20 minutes long, depending on the bitrate.
Your choice of 500kbps is very reasonable for todays Internet.
Video bit rate
Video bitrate is the minimum amount of data that must continually flow into the video player in order for the player to display that particular video uninterrupted. If that supply of data is not high enough, the video player will stop…. Wait for more data to download, then resume. The video bitrate is set as a parameter when the video is encoded.
One of the principle of goal setting is to "Begin with the end in mind". In this case it'll be very hard to give good recommendations because the end is not defined. So I'll just make a few assumptions and you can correct me as needed.
First, I'll assume that since you are converting to Flash, you want to deliver this video over the Internet. If that's true, then we'll have to make some assumptions on the Internet connection download speeds of your potential viewers. Let's just say that most have at least a 1.5Mb connection or faster.
OK, that would mean that a video bitrate of half that should usually provide a video download that is not interupped by buffering (most of the time anyway). So assuming a video bitrate of 750kbps, what would the optimum display dimensions be?
Before we decide, here's a little info about bitrate. For highest quality playback, the video bitrate is tied directly to the display dimensions. That is, the larger the display, the more incoming data is required to properly display the video. Think of bitrate in terms of a can of paint. If you have 1 quart of paint, you might be able to do a very nice job on a 32 X 24 foot area. But if you try to stretch that same amount of paint out over a 64 X 48 foot area, the coverage will not be nearly as good and you get poor results.
In the same way, a video displayed at 640 X 480 pixels will require 4 times the bitrate as a video displayed at 320 X 240 pixels to produce the same quality. So for example a video with a bitrate of 100kbps, displayed at 160 X 120 will produce the same quality results as a video with a bitrate of 1600kbps if displayed at 640 X 480.
So to boil it all down, video bitrates of 750kbps, even up to 1000kbps can usually get delivered of the Internet on most high speed connections. Higher bit rates may work for really fast connections but will cause problems for viewers with slower connections. Video display size has a direct bearing on the final quality. In the 750 to 1000kbps range, display size should be kept around 450 or 500 width max (and whatever height the aspect ratio calls for). Yes it can be displayed larger, but the quality will suffer.
Sound like your audio settings are fine, especially for Internet delivery.
As for framerate, maintain the original raw video framerate for best results. So if the video was shot at 24fps, leave it.
As for video converters, do you have the Flash 8 Video Converter? It works just fine for video to be delivered over the Internet. Remember, you are taking a Cadillac version of video (h.264 HD) and stuffing it into a Chevy body to get it to work over the Internet.