fyi...If you install flash from market it changes the minimum processor speed to 500mhz. I have mine set at 125mhz but won't go any lower than 500mhz. Uninstalled and used the .apk version of flash and it leaves it alone.
I've loaded Flash from the Market without any issues with SetCpu. Was it possible that you were charging the phone when you noticed the 500MHz min CPU speed? The min speed specified by SetCpu is overridden to 500MHz when the phone is charging.
