Apparently this has been an issue for a long while now, but I only came across it today. Google's custom Flash Pepper API has issues loading local files. I just wanted to throw this out there in case someone else runs into this issue and is at a loss (as I was).
Here's the deal: if you have a swf file that loads external files (images, other swfs, etc) and attempt to run it in Chrome on your local machine, the files may not load. Below are two screenshots showing this in action. Note that in Firefox, the image loads. In Chrome we just get the black swf background. Boo!