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and welcome to WmW. You probably won't like my suggestion, but I think it is simply the best solution. Make a plain vanilla HTML version of the site and let users choose what they want to get. I promote 21 sites set up like this and more than 80 % of users choose the HTML version. That way you will meet both search engines and visitors preferences.
From personal expericence, Flash sites that utilize cloaking can achieve very good rank. Traffic for those cloaked sites comes nowhere near the traffic for sites that offer an html version.
Combining XML and Flash would almost ensure that only a minority would be able to enjoy the site.
With XML you typically end up with a site that has XML, XSLT and HTML. If you decide to do that, you've entirely redesigned the site and can dispense with the Flash version. ;) That would make most surfers quite happy. Flash is still seen as an annoying novelty rather than a dynamic way to display information by the majority of surfers.
DG
Untill some competitor looks into it. If this thing runs for 6 months, it is certainly in a non competitive arena.
Also, Google will not give the same weight (if any) to the NOFRAMES tag. Many of my "well fed" framesets got PR0'd. And this on perfectly legit framed sites with NOFRAMES in every frameset and visible HTML content. Imagine what can happen with a fake framed site.
OK, the question now is do you need the whole site in HTML? Or, just one good keyword heavy selling page and a contact us page? I think that depends on the audience, don't you? I mean, a flash designer probably only needs a keyword-heavy page but not the whole site, but a site selling custom woodworking tools probably needs every page in HTML. Anyone agree/disagree?