I love what they've done and how my kids have taken to it. The combination of design tools and code reminds me of the "golden age" of Flash in some ways. Vector graphics editor, sound editor, code, it all works together - this is pretty special to see in one tool that kids can use.
The games are actually getting quite good on the platform, and that means it's hard for a lot of parents to understand how much time is gaming vs. coding.
I've never made the Flash connection but I totally agree.
On my end, I try not to worry too much on the gaming vs coding thing. I'd rather have my kids playing games on Scratch then some other place where they can't view source.
I figure, if they have some basic skills and know what's possible, they'll eventually get curious and poke around. I think that's more true for some kids then others though (even in my own house).
The games are actually getting quite good on the platform, and that means it's hard for a lot of parents to understand how much time is gaming vs. coding.