swfmill and mtasc are free, open-source tools you can use to create SWFs.
- mtasc is the Motion Twin ActionScript 2.0 compiler, which is an extremely fast compiler with some nice features. If you want the benefits of AS3, you could use haXe or the flex sdk from adobe instead (but I heavily recommend you use mtasc and AS2 first, it's easier).
- swfmill is a tool that, among other things, allows you to set up library resources and place clips that you can then access from ActionScript, using a simple XMLish format.
Kongegrate is trying to crowd-source Flash games. Neat idea.