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In Flex 3, you just said

<mx:Image source="@Embed('foo.swf')"/>

What is the preferred way to do this with Flex 4? Should I just keep using Image?

+1  A: 

Image tag is for loading "Image" formats along with swf. You can go also go with SWFLoader. Flex 4 is still Beta. I would go with Image or SWFLoader, preferbaly the second one.

and I am sure this wont get changed in Flex 4 too.

Satish
I agree with using the Swfloader - if will provide functionality specific to swfs that can be helpful
Jeff Pinkston