For better or worse, Apple’s App Store submission policies became much more lax last week. In Apple’s own words, “In particular, we are relaxing all restrictions on the development tools used to create iOS apps, as long as the resulting apps do not download any code. This should give developers the flexibility they want, while preserving the security we need.”

So while Apple’s policy on using Flash to make a game hasn’t changed, they are allowing streaming Flash and code conversion technologies that will let Flash games run on the iOS.

After just a few days of development, given that the announcement was only seven short days ago, iSwifter, from Peter Relan’s YouWeb, is launching today. iSwifter is using cloud computing to stream various Flash portals, such as Kongregate, Yahoo! Games, and AOL Games, to your iDevice, unaltered.

“iSwifter represents a game-changer for smaller Flash game developers that don’t have the resources to port their games to multiple mobile platforms like iOS and Android,” says Net Jacobsson, a former Facebook executive, advisor to King.com, and founder & CEO of Playhopper, a Flash-based social gaming start-up.

The big question here is what this means for fans of the App Store. You can really look at it one of two ways, one being extremely optimistic and one being, well, Apple’s stance.

If everything works out for streaming services like iSwifter, gamers could enter a sort of renaissance of free gaming options. I’m not exactly sure how the online services will work within things like, say, Yahoo! Games, but I would be pretty happy to play Yahoo! Pool in some of my downtime. Sure, Flash games can be silly, but there are a ton of them out there, and many of them are far better than some of the free offerings in the App Store.

Take Johnny Two Shoes (Plunderland) for example. As much as I love Plunderland, I think I spent more time playing their Flash title, Heist 2, than I’ll ever spend on their hit App Store title. Nothing against their iPhone games, but they were originally a Flash game outfit, and they made some quality titles.

The down side of all this is highlighted in a John Gruber quote on Daring Fireball. “As for Flash games, isn’t it utterly obvious that existing Flash games, which work via keyboard and mouse, wouldn’t work at all on devices which lack both keyboard and mouse?”

I guess that kills my dream of playing Yahoo! Pool. I’m not really sure how you would accomplish the click and drag necessary to hit a shot, but the resulting mess doesn’t sound pretty. I suppose Flash devs could start coding in anticipation of iDevice usage, but as Steve Jobs said himself, “If developers need to rewrite their Flash websites, why not use modern technologies like HTML5, CSS and JavaScript?”

Regardless of technical limitations, be sure to check out the iSwifter video below. It further explains the mission of the app, and shows a live demo of iSwifter playing Screw the Nut, “one of Kongregate’s biggest games,” on the iPad.

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