update:

So…. loading the bitmapData as a byteArray using the netStream class seems to work.  I’m going to do a little load testing to see how fast this method is before proceeding.  Here are some resources:

• http://livedocs.adobe.com/flex/201/langref/flash/display/Loader.html#loadBytes()
• http://www.onflex.org/ted/2007/12/progressive-image-loading-with.php

update:

Although at first glance the previous solution seemed to work, it looks like I am still unable to use bitmapData.draw() on the display object that’s created.  I wrapped the some console logging around each step of the conversion process and it looks like everything goes to crap at: oBitmapData.draw(oSource, oMatrix) where oSource is the loaded file in a Loader class that I have forced a type convertion on.  The struggle continues.