I believe it should work.
Take a look at the security docs at
http://www.adobe.com/devnet/flash/articles/fplayer8_security.html but I
think you are good to go.
This appears to be the relevant quote from
http://www.adobe.com/devnet/flash/articles/fplayer8_security_03.html
"Flash projectors, which can be created from the Macromedia Flash authoring
application and from the stand-alone players, do not enforce local security
rules. This is because they are executable applications which users must, in
general, know to treat with caution."

Signature
Lon Hosford
www.lonhosford.com
May many happy bits flow your way!
I have created a flash .swf application that is hosted on a website and
communicates nicely with the back end SQL server using xml and a .net middle
tier. It turns out now that there's a possibility that the client wont
allow
any Flash player to be installed on the client machines, although they they
do
all have internet conncetions.
I would like to convert my web-hosted .swf to a desktop .exe. I was
wondering
if its possible for a Flash .exe to be installed client-side and have two
way
communcation between that .exe and a webserver. The way I envision it, I
will
communicate by sending xml statements back and forth between the .exe and
the
web server, but I havent found anywhere if this is possible.
Thanks.