from the flash help files:
As discussed in the entry LocalConnection.connect(), Flash
adds the current superdomain to connectionName by default. If you
are implementing communication between different domains, you need
to define connectionName in both the sending and receiving
LocalConnection objects in such a way that Flash does not add the
current superdomain to connectionName. You can do this in one of
the following two ways:
Use an underscore (_) at the beginning of connectionName in
both the sending and receiving LocalConnection objects. In the SWF
file containing the receiving object, use
LocalConnection.allowDomain to specify that connections from any
domain will be accepted. This implementation lets you store your
sending and receiving SWF files in any domain.
Include the superdomain in connectionName in the sending
LocalConnection object--for example, myDomain.com:myConnectionName.
In the receiving object, use LocalConnection.allowDomain to specify
that connections from the specified superdomain will be accepted
(in this case, myDomain.com) or that connections from any domain
will be accepted.
Note: You cannot specify a superdomain in connectionName in
the receiving LocalConnection object--you can only do this in the
sending LocalConnection object.