Do you use CPU or GPU render mode ? You should use CPU to apply filter.

Here a small exemple to deforme a picture when you touch screen. (I test it on my Samsung Galaxy S)

*Sorry for french comment...

The "Img" class is a Bitmap (your picture)

The "Vague" class is a MovieClip Animation of wave (black and white).

Main Class:

package
{
    import flash.display.Bitmap;
    import flash.display.Sprite;
    import flash.display.StageAlign;
    import flash.display.StageScaleMode;
    import flash.events.AccelerometerEvent;
    import flash.events.Event;
    import flash.events.MouseEvent;
    import flash.events.TouchEvent;
    import flash.geom.Matrix;
    import flash.sensors.Accelerometer;
    import flash.text.TextField;
   
    import modules.fx.Deformation;
   
    import modules.utils.FPSCounter;
   
    /**
     * ...
     * @author Michaël Chartrand
     */
    public class Main extends Sprite {
       
        private var _img:Bitmap;
        private var deformation:Deformation;
       
        public function Main():void {
            //setup stage
            stage.scaleMode = StageScaleMode.NO_SCALE;
            stage.align = StageAlign.TOP_LEFT;

            //add handlers
            addEventListener(Event.ADDED_TO_STAGE, init);
        }
       
        private function init(event:Event):void{
                //removes listener
                removeEventListener(Event.ADDED_TO_STAGE, init);
               
                _img = new Bitmap(new Img);
                addChild(_img);

                setupTransformBitmap();
        }
       
        private function setupTransformBitmap():void{
            deformation = new Deformation(_img);
            this.addEventListener(Event.ENTER_FRAME, rappel);
            this.stage.addEventListener(MouseEvent.CLICK, ajoute);
           
            var fps:FPSCounter = new FPSCounter(0, 0);
            addChild(fps);
        }
       
        //FONCTION rappel
        //--------------------------------------------------------
        private function rappel(event:Event):void{
            deformation.appliqueEffet();
        }
       
        //FONCTION ajoute
        //--------------------------------------------------------
        private function ajoute(event:MouseEvent):void {
            deformation.ajouteEffet(Vague, mouseX, mouseY);
        }

    }
   
}

Deformation Class:

package modules.fx{

    /**
     * ...
     * @author Michaël Chartrand.
     */

    //IMPORTATIONS
    //--------------------------------------------------------
    import flash.display.MovieClip;
    import flash.display.DisplayObject;
    import flash.display.Bitmap;
    import flash.display.BitmapData;
    import flash.filters.DisplacementMapFilter;
    import flash.filters.DisplacementMapFilterMode;
    import flash.geom.Point;
    import modules.forme.Rectangle;

    //CLASS Deformation
    //--------------------------------------------------------
    public class Deformation extends MovieClip {

        //PROPRIÉTÉS
        //--------------------------------------------------------
        private var _imageBitmap:BitmapData;
        private var _displacementMap:DisplacementMapFilter;
        private var _contenant:MovieClip;
        private var _rectangle:Rectangle;
       
        private var _objet:DisplayObject;
       
        //FONCTION Deformation
        //--------------------------------------------------------
        public function Deformation(objet:DisplayObject) {
            //Affectation
            _objet = objet;
           
            //Création d'un bitmap d'après les proportion d'une image.
            _imageBitmap = new BitmapData(_objet.width, _objet.height, false, 0x000000);
           
            //Contenant de l'effets et du rectangle
            _contenant = new MovieClip();
            _contenant.x = _objet.x;
            _contenant.y = _objet.y;
            _contenant.visible = false;
           
            addChild(_contenant);
           
            //Forme un Rectangle
            //--------------------------------------------------------
           
            //Arguments    :: couleurFond, transparenceFond, couleurContour, pixelContour, transparenceContour, largeur, hauteur, coinLargeur, coinHauteur
            _rectangle = new Rectangle(0x000000, 1, 0x000000, 0, 1, _objet.width, _objet.height, 0, 0);
            _rectangle.x = _objet.x;
            _rectangle.y = _objet.y;
            _contenant.addChild(_rectangle);
        }
       
        //FONCTION ajouteEffet
        //--------------------------------------------------------
        public function ajouteEffet(classe:Class, posX:int, posY:int):void{
            var effet:MovieClip = new classe;
            effet.x = posX;
            effet.y = posY;
            _contenant.addChild(effet);
        }
       
        //FONCTION appliqueEffet
        //--------------------------------------------------------
        public function appliqueEffet():void{
            //Reproduit l'image sur le bitmap
            _imageBitmap.draw(_contenant);
           
            //Crée le filtre de déformatiom
            _displacementMap = new DisplacementMapFilter(_imageBitmap, new Point(0, 0), 1, 1, 10, 10, DisplacementMapFilterMode.CLAMP);
       
            //Applique le filtre de déformation
            _objet.filters = [_displacementMap];
        }
       
    }
}