A couple years in now, there's still something about mouseEnabled I'm not getting. I have a Sprite (for example here "Sky", that contains many objects, one of them is a Cloud, which I do not want to receive Mouse Events. I overlay this Sky on some other display objects. I want the cloud to be visible, but not to block mouse events. If you see a tree through the clouds you should be able to click on the tree.
In the Sky class:
mouseEnabled = false;
cloud.mouseEnabled = false;
cloud.mouseChildren = false;
Even with this configuration, when the cloud is over the tree I can't click on the tree because the cloud blocks it. Why???