Flash finally on the iPhone? Kind of…

Flash on iPhones, iPads and iPods? Yes, in a first, Apple (AAPL) is budging a bit.

Apple has just made the new Skyfire browser available to download from its App Store for $2.99. The browser converts Flash video to HTML5.

Still, Skyfire doesn’t help with Flash-based games, which require interactivity, or with the popular Hulu video streaming site. Hulu is blocking Skyfire.

Back in April, Apple CEO Steve Jobs attacked Flash for poor performance on mobile devices, and for being an energy vampire. Flash developer Adobe (ADBE) notes that the vast majority of video online is encoded in Flash.

David Goldman reports in CNN Money that Skyfire offers a workaround. Skyfire servers download, render and translate the video into HTML5, which Apple’s iOS devices do support. Skyfire displays a thumbnail on which users click to stream the video.

“We will attack those pesky blue Flash error messages,” says Jeffrey Glueck, CEO of Mountain View, CA,-based Skyfire. Go here for a Fortune video interview with Glueck explaining Skyfire’s “engineering magic.”

Katie Marsal reports in Apple Insider: “As Flash has been banned from Apple’s iOS devices, and had a limited presence so far on Android handsets, many websites have begun to offer content in both Flash and HTML5, to ensure compatibility with mobile browsers.”

Goldman says it’s difficult to sort out the percentage of online video that is unavailable to iOS devices and how much will be available with Skyfire. While 75 percent of web video may be encoded in Flash, that doesn’t preclude it also having been encoded in HTML5. More than half of online videos are also available in HTML5, according to MeFeedia.

YouTube encodes its videos in multiple formats, including Flash and HTML5, so it can be viewed on mobile devices without Flash support.

The Skyfire browser worked similar wonders on Google’s (GOOG) Android OS earlier this year. Since May, Skyfire 2.0 has been downloaded more than 1.5 million times.

This success apparently opened the way for Apple to review and accept Skyfire. Par for the course, Apple did not comment.

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