yet another high cpu using flash issue

Disabling Hardware Acceleration in Flash means that we're doing all of the processing on the CPU, instead of on the GPU.  The GPU is purpose-built for 3D graphics and video decoding and is far more power efficient.  Decoding H.264 video in software is very CPU intensive, which is why we made the huge investment to enable hardware acceleration on the vast majority of available desktop hardware. Running six CPU intensive tasks simultaneously (which is what you're doing by using six simultaneous tabs) is unsurprisingly going to tax your machine.

If you've disabled Hardware Acceleration because video wasn't working right or something, figuring out how to get that enabled (or moving to better hardware with good driver support) would solve the vast majority of what you're describing here.  If HP doesn't offer updated drivers, I'd recommend trying the corresponding Nvidia drivers, as OEMs aren't always motivated to pick up the latest fixes once a model is no longer generating new revenue for them.  The chipset manufacturers tend to provide longer support, but those drivers aren't officially supported by the OEM.

The architecture for Protected Mode for Firefox is a result of the fact that we've retrofitted a modern plug-in security approach to a legacy plug-in architecture.  As you've noticed, equivalent sandboxing in other major browsers is designed into their plug-in architectures, and is therefore more efficient.  We've made huge investments to support modern security architecture and always do our best to accommodate efforts from our partners in the browser space to further secure the browser.  You can find a detailed explanation of our approach to Firefox here: Inside Flash Player Protected Mode for Firefox

Firefox controls the instantiation and destruction of Flash instances.  You'll also notice that Firefox hangs out for a while after shutdown.  This is something that we're aware of, but it's beyond our control.

Flash doesn't have much to do with audiodg, except for the fact that it generates sound and uses the windows sound subsystem.  This article seems to present some reasonable advice in resolving issues with high CPU consumption from the sound subsystem.  Fix Audiodg.exe High CPU Usage in Windows 7 | Windows EXE Errors

Hardware accelerated video encoding is typically not available on consumer-grade hardware (primarily because of the difference in licensing models for encoding and decoding with popular commercial codecs), and therefore is done on the CPU.  The particular website chooses what codecs and bitrates are involved, and higher quality feed will consume more CPU.  It's also worth pointing out that not all video can be decoded in hardware.  We provide clear guidance to content providers on how to encode video so that it can be played back efficiently, it's ultimately up to the content provider to follow that advice.

So, long story short, each tab consumes resources.  Running a single tab is going to use less resources than running multiple tabs.  The latest version of Internet Explorer does some stuff to reduce resource consumption in tabs that you're not actively looking at.  We're discussing possibilities with the Chrome folks for doing the same thing in Chromium-based browsers.  Mozilla isn't interested in investing in browser plug-ins, so we don't expect to see the necessary browser-side improvements there.  The Chrome sandboxing model is more efficient that protected mode for Firefox, so tasks that require moving a lot of data (like streaming video) may use less CPU in Chrome.

To answer your questions specifically:

1.) There was a time before we supported multiple tabs, webcam streaming, H.264 video decoding and modern security sandboxing.  I wouldn't recommend using those versions.

2.) There are a few posts about this, but we have ~1.5 billion users.  The majority of the very small number of folks relative to our install base are complaining their machines are overheating, which is a symptom of an ineffective cooling system. 
     There's nothing magic about Flash that causes it to somehow superheat the CPU.

     There was a time before tabs, where people didn't normally run 5-50 browser windows.  Websites also got much more complex, and the security threats got far more serious and complex.

     Playing video as a plug-in in the browser as opposed to something like VLC is inherently less efficient, as pretty much each pixel and packet gets passed through the browser before it gets to the OS or drivers.

     All of these things require additional processing.  The resources on your computer are still finite, and there is an upper limit to the number of simultaneous tabs you can use.
     At some point, you come to a juncture where you need to decide between throwing more hardware at the problem, or using less tabs simultaneously.

     Also, most laptops have power saving CPUs, so they'll ratchet the clock speed down to save battery.  You might want to check your power settings to make sure you're running at the CPU's full capacity when plugged in.

3.) Not that would generate anything really useful.

4.) Possibly.  You actually already have a multi-core machine.  I think you'd get more bang for your buck by enabling hardware acceleration and switching browsers.

5.) You already have a multi-core machine that we support.

Your Wish: We're constantly addressing security issues identified through our own testing, emerging research and intelligence from our partners in academia, government and industry.  We're also looking for opportunities to tune the player, but the reality is that Intel, Nvidia and ATI (and a long list of others, in addition to Adobe) have tuned Flash Player extensively for their hardware.  We work closely with the Internet Explorer and Chrome teams to continue to make the Flash experience better, and are always happy to work with the Firefox team should they decide that they're interested in plug-ins and the desktop browser again.  At the end of the day, Flash is just a low-level runtime.  It's just as possible to write inefficient ActionScript as it is to write inefficient C++, and while we provide some fantastic tooling for profiling your Flash content, it's up to individual content providers to write efficient code.  It's really difficult to find opportunities to make generic optimizations that don't break a percentage of the hundreds of millions of sites published with Flash content.

I'm actually still not clear on what the problem you're experiencing is.  All software running on your machine that's actively processing something is going to use a non-zero percentage of CPU time.  The symptoms you describe indicate that Flash consumes 5% of the CPU, which is totally reasonable.  I'm guessing that I don't have the complete story.