Well that's not really anything new, it's just a more sensible answer than "no you're not allowed to do that" based purely on the fact that it 'could' be used to spam.

If you're going to use z-index to hide a load of spammy text/links, I'd expect them to take the same view of it as with any other spammy hidden text.

All he's saying is the technique per se isn't bad, and that it could have valid uses that aren't about spamming Google.

If:
Google wants to see what the user sees.
Then:
Why can't text that appears in Flash be placed in a div tag without penalty, in the same manner as z-index? Blitz does this, and blogs about it how successful they are, but I've also read that a site can be penalized for doing it. If it's the same exact content it should be deemed okay.

Logical but Google often won't say it like this.

theres no better way to test it :)

Well its good to use text below the image or flash but it is not a good practice to hide that text. Also google is too smart even google is indexing the pages in swf files and there are many examples i have seen so the thing is indexing flash is easy but the problem is having them fully index the content within that flash file and associating it with the page it's on and getting that page to rank well. There are ways to optimize for flash pages though that have had good success without being black hat.