That syntax, with the <script> tag with the "event" and "for" attributes is an Internet Explorer-only way of setting up an event handler on an DOM object. Here, it adds a FSCommand event handler to the myFlash object. This is needed because code running inside the Flash object may want to run JavaScript in the browser. To do this, the Flash object will invoke the FSCommand event handler, passing the JavaScript to run as the arguments to the event.
With this player, the name of a JS listener object is passed in the FlashVars param to the player. It then uses FSCommands from ActionScript to modify that listener object, with an occasional call to a method on that listener when it's other properties have been modified. I suppose that IE isn't able to run the JS code using this method until the FSCommand handler has been added to the Flash player object, which is why that code exists. Modify it to use the ID of your Flash object and you should be in good shape.