There are a lot of Flash physics engines available to use. I've only tried Box2D, APE, and Foam.
Foam is my favorite so far. I actually like the options of Box2D better but it's just not as ActionScript-friendly as Foam.

Foam sets up the easiest of these 3 engines for an ActionScript only project...In my opinion, setting it up to use in my Flex projects takes a little more work depending on what I use it for. Seeing the end result of it is fun to watch.

Below I'm currently using my polygon editor to test Foam out in Flex.