We’ve been working a lot with Adobe OSMF since it’s inception (back when the changes between 0.x releases were so different you had to redo lot’s of work)..
OSMF is a great initiative and well executed project, for two main reasons:
1. It solves the headaches of working with Flash video (which we had to solve ourselves for a long time before), provides a reliable and stable framework that helps you adapt quickly to the rapid media additions being made to the Flash platform.
2. It tries (slowly we hope it will actually be) to be a standard for all Flash based media players out there. This means that as a 3rd party vendor to media solutions like ad networks or any kind of interactive solutions with video – you will be able to write a plugin once and all flash based media players out there will be able to load it.
#2 is merely a wish at the moment as OSMF is still fairly new to the market, and not many have been quick to adopt it (which means re-writing your media player).

You can take a look at the KDP (Kaltura Dynamic Player) project, it’s open source under AGPL – http://www.kaltura.org/kdp-3x-adobe-osmf-based-kaltura-dynamic-media-player

progressive enhancement sure does seem interesting.