To increase the image quality of the images that end up in the final exported SWF, follow one of three options.
1. Choose PNG instead of JPEG
When images, including PDFs, are placed into an InDesign document and then exported to SWF, the images will all be downsampled to 72dpi and saved in one of two file formats, JPEG or PNG. The JPEG file format is a "lossy" file format, and depending on the image quality setting chosen, the final images quality could vary wildly. The PNG file format is "lossless", in that it does not add distracting and ugly artifacts to images.
In the SWF Export dialog, the default setting for Image Compression is set to Auto. Change this setting to "Lossless (Do Nothing)". It is unfortunate that this option is named this way. The three choices should be listed as Auto, JPEG and PNG. Adobe has changed in this in InDesign CS5, but for CS4, one has to know that "Lossless (Do Nothing)" really means “save the images as PNGs.”
The plus to using PNGs is that the images will end up looking great. The minus to using PNGs is that the file size of the SWFs will be larger because the images are not being compressed.
2. Choose High or Maximum JPEGs
If file size is a concern, then switch the Image Compression option to JPEG, but choose a higher quality setting from the JPEG Quality pop-up. The default is set to Medium. Choose High or Maximum instead. The higher the quality setting, the better the images will look, but their file sizes will be larger. That said, the file size of a maximum quality JPEG is usually smaller than a PNG.
3. Resample in Photoshop and Import JPEGs
The method that gives the user the most control over image quality and file size is to downsample the images in Photoshop to the exact pixel dimensions desired before placing them into InDesign. Open the PDFs (or any other image file formats) in Photoshop and size them to the desired pixel dimensions. If opening a PDF, Photoshop will display an Import PDF dialog first where the pixel dimensions can be set. If other file formats are used, resize them in Photoshop by choosing Image > Image Size. Then make sure the Resample Image checkbox is turned on, choose Bicubic Sharper from the pop-up menu at the bottom, and enter the pixel dimensions in the Pixel Dimensions section of the dialog box (not the Document Size section).
Once the images are the correct size, save them as JPEGs, and set the quality desired level.
After the final JPEGs are placed in the InDesign document, do NOT scale them. Place them at actual size (100%). If a JPEG goes into InDesign at 100% and nothing else is done to them, they will "pass through" to the final SWF untouched. Meaning, they'll go out exactly as they came in. This also means the JPEGs cannot be altered in any way that would cause them to be resampled during SWF Export. Examples are applying transparency effects, drop shadows, etc., to the JPEGs in InDesign.
See the examples below, where a PDF was placed into InDesign, scaled to 50% of its original size, and then various SWFs were exported, changing the Image Compression and JPEG Quality options as described in items 1 and 2 above.