Wanna see latest flash player 10.1 running on Android 2.1, visit Droid-X-perience on your HTC Hero.
Yes it does work and not only for games, but for videos, music as well. If you still have doubts… please add a link of a website (in comments) you want me to show you working on my updated HTC Hero.
I am also working on creating a package for 2.1 Android users to upgrade their existing flash player to 10.1 (non root users) Please also add comments if you want to help me out with that.