As of Flash 10.1, they have added the ability to add bytes into the NetStream object via the appendBytes method (described here http://www.bytearray.org/?p=1689). The main
The place in the OSMF code where this happens is the timer-fired state machine inside of the HTTPNetStream class implementation... might be an informative read. I think I even put some helpful comments in there when I wrote it.
As far as the general question:
If you read an entire FLV file into a ByteArray and pass it to appendBytes, it will play. If you break that FLV file in half, and pass the first half as a byte array and then the second half as a byte array, that will play as well.
If you want to be able to switch around between bitrates without a gap, you need to split up your FLV files at matching keyframe points... and remember that only the first call to appendBytes has the initial FLV file header ('F', 'L', 'V', flags, offset)... the rest just expect a continuation of the FLV byte sequence.