The Webkit engine is embedded in the AIR runtime. It is not embedded in the Flash plug-in, however, so you cannot embed a browser within a .swf (Flash application) running inside a Web browser (or even using a standalone, desktop .swf runtime) as the Flash plug-in doesn't support that. AIR is your only option for actually embedding a browser within a Flash application.
There are a number of examples on the Web of using s to position a browser component/window over a Flash application to make it look like you've embedded a browser inside of the Flash app. Before AIR came along, this was what a lot of Flash/Flex developers did.