AIR app to build with files it will load.

In flash during publish at the bottom of the General tab you can specify files to be included inside your app. They don't need to be extracted to use, they are automatically placed in your "applicationDirectory".

e.g. (CS5.5 publish settings, yours may look different):

Just to make something clear,  you cannot write to that folder after your application is started. It is read-only:

File.applicationDirectory—the read-only directory where the application is installed (along with any installed assets)

http://help.adobe.com/en_US/FlashPlatform/reference/actionscript/3/flash/filesystem/File.html

You didn't mention what device you're targeting but there's also rules about storing content that can be re-obtained.

If you have a ton of content that can be updated then my strategy is to use a very tiny XML file which contains version numbers of assets.

e.g.

<?xml version="1.0" encoding="utf-8" ?> <assets>     <file id="1" v="2.5"/>     <file id="2" v="1.0"/>     <file id="3" v="1.5"/>     <!-- etc --> </assets>

If there's potentially hundreds of assets I can quickly traverse my current XML file versus this tiny XML file looking for any newer content. I then only get that content. I pre-bundle the files necessary to start the app to a usable point. That aside..

On iOS, when the user loads my app I check for internet connectivity and then attempt to download the latest version of my content. I store it to the File.applicationStorageDirectory and because iOS regulates that if this content can be recreated or is not vital to the application, I set the "do not backup" bit. For resource I want to share through iTunes (downloaded movies, PDFs, etc) I enable File Sharing via iTunes permission and save to the File.documentsDirectory. Those files can be dragged off the device to my computer for saving.

Android is pretty much the same only I don't need the regulation of the "do not backup" bit.

That was just one example of both an dynamic strategy, prepackage strategy, efficient update strategy and the differences you'll encounter with dynamic content rules from device to device.