I would agree, it's a real shame that the Flex API cannot deal with the KML/KMZ directly without having to use an external call.
I'm also in the same situation where I have sensitive information that cannot be used externally. In fact, the whole reason we went with the ESRI Flex API was that it didn't require internet access like the Google API does.
Yes, we could use ArcGIS Portal, but do we really want all that on the server just to deal with KML? I doubt that would fly. No all our Flex apps use an ArcGIS backend, in fact many use very lightweight webservers/webservices.
So could the developers on the API please consider this decision?
Cheers
Ian