I think the improvement we'll see (eventually, once app-writers get moving) is in actual Flash type stuff, since it's all about the ActionScript 2.0 support and more native Flash features. Taking a guess, this means more advanced games, more useful applications (I haven't checked, but in general the clientserver XML abilities should be way, way way better) and small widgets that can do more stuff.
Using videos as the sole litmus test is kind of unfair, it's not really the focus of Flash Lite on mobile devices. I see it as the beginning of people writing apps that can talk to servers (Flickr uploader? Blog poster? Online banking? Map directions?), just the way that Flash 7's release on the desktop paved the way from dumb intro splash pages to actual useful widgets on a website.