This story is all abuzz across the interweb today. Everyone is writing and commenting about the iApp coming soon as the Skyfire browser which is being billed as the answer to your Flash cravings on an iDevice.

It looks as if Apple has finally approved the Skyfire browser for iOS devices (the app has been in the approval cycle since September and many of us are aware of just how brutal that “approval cycle” can be – check out our post here.)

What essentially is happening with Skyfire is some fancy re-encoding of Flash videos into the web standard HTML5 format, which, obviously, is viewable on Mobile Safari.

To get around Apple’s restriction, Skyfire came up with an innovative solution: When users click on a page that contains Flash video, Skyfire’s servers download, render and translate the video into HTML5, which is a Web standard that iOS devices support. Skyfire then displays a thumbnail that users can click on to stream the video from its servers.

Check out the video below for a sneak peak:

This method obviously won’t work for games or anything that requires user interaction, but it’s definitely a winner for the millions of Flash-only videos on the web.

Something to keep in mind – if you’re a Hulu fan/user, you’re outta luck; you’ll still need the $9.99 subscription to Hulu Plus in order to view their videos on your iDevice.

Skyfire is expected to be available in the App Store before the end of the week for $2.99.

You can keep up with all the goodness CEO Jeff Glueck and team are creating by following them on Twitter @JeffGlueck and @skyfire.

[hat tip: iPodTouchFans | Macgasm]