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here is a post on how to cancel drag on hitting Esc, maybe you could modify it to your nees
You can use an tricky way to achieve this. In timer change event add the statement:
I tried to add this line but dragged object still remains under the mouse cursor.
"here is a post on how to cancel drag on hitting Esc, maybe you could modify it to your nees
This helps, but I had to modify the code a little bit. My Flex 3 doesn't recognize the DragProxy type of object so I had use a little trick.
var dragProxy: DragProxy = DragManager.mx_internal::dragProxy;