Tested using 3.1.0, then upgraded to 3.1.2 without improvement.
Using Firefox 3.5.2, on OS X 10.5.8.
I can reliably replicate this bug by reloading the page, and removing the page from view until loading is complete (in my example I was switching to another tab within Firefox). If I simply perform a soft or hard refresh of the page, while keeping the page in view, it renders as expected.
According to Firebug, the DIV and OBJECT elements are the correct height, which narrows the problem down to the Flash object itself.
For what it's worth, I am able to replicate the bug using the video embedded on
http://flowplayer.org/demos/configuration/index.html