not really.  Flash was only a pure animation tool as "Future Splash," and iirc, that's pre-Web.  under Macromedia, and by the time i learned it in '98, it was primarily a tool for making Web interfaces, and animation held a firm backseat to interface elements, nested timelines, and scripting.  when i first picked it up, the included help said to avoid graphic symbols because you couldn't do as much with them scripting-wise.  for about 99% of its use online, it's done nothing but get easier and more robust.

no, there was never a way to make part of a JPG transparent in Flash.  JPGs don't have alpha, and that's completely app independent. it only changes if you change the format of the image.  since Flash has always handled images as an external resource, that just isn't possible.  what you could do is something far weirder, and as far as i know, you still can.  when you break up an image on the stage, it becomes a shape whose fill is the image.  you can then eliminate any part you want.  or you can have Flash convert your images to vector and do it by color.

you could even generate a set of masking images, convert them to vector, and use them as masks.  but you can't, and couldn't since i've been using it, actually make a transparent JPG.

none of this quite matters, though.  JPGs are lossily compressed.  most useful AVIs are as well.  it's a really, really, really bad idea compress something twice and double your artifacts.  if you want to  generate a movie out of a series of images, it would be much better to make them a lossless format like TIF or PNG.  and if you want transparency, you can just have it in the generated images.