Update: Adobe has retracted their claim (via MacRumors) that OS X Lion disables Flash Player hardware acceleration. Great news:

The final release of Mac OS X Lion (10.7) provides the same support for Flash hardware video acceleration as Mac OS X Snow Leopard (10.6). The previous “Known Issue” described in a tech note suggesting that video hardware acceleration was disabled in Lion was incorrect and based on tests with a pre-release version of Mac OS X Lion that related to only one particular Mac GPU configuration.

In addition to the goodies Lion brings to your everyday computing, some unwanted side-effects surface with Adobe writing in a knowledge base article yesterday (via TUAW) that the operating system disables hardware acceleration while exhibiting other issues with their Mac apps:

 Flash Player may cause higher CPU activity when playing a YouTube video possibly related to disabled hardware acceleration. Custom native mouse cursors are not animating properly on Mac 10.7. The Flash Player settings dialog does not respond to mouse clicks. If you find yourself in this state, you can use the “tab” key to change the focus to the “Close” button and use the spacebar to close the dialog.  While not all settings are available, you can also use the Flash Player native control panel located in System Preferences.

Other affected Adobe products include Fireworks, Illustrator, Acrobat, Lightroom, Photoshop and Premiere Pro. On a brighter note, Adobe promised to “investigate” which of the Lion-specific features will see support in their Mac programs, such as Restore, Autosave, Versioning, Full Screen Mode and new multitouch gestures. Adobe on Tuesday released Photoshop Elements on Mac App Store for $80, a modest saving over the $99 for boxed version. The release marked Adobe’s first offering on Apple’s online-only store for Mac apps.

Making good on Steve Jobs’ promise to get rid of legacy technologies in Apple’s products, Lion installation does not include Java runtime nor Flash Player, both of which users are required to install manually. Earlier this month Adobe released beta versions of Flash Player 11 and its run-time environment, AIR 3. In what could only be described as a step towards a file system-agnostic environment akin to iOS, Lion also hides the Library folder from view to reduce the chances of tech illiterate users accidentally deleting application support files.

Lion has been received exceptionally well since yesterday’s launch, with 90 percent of the Mac App Store reviews favoring its many features and enhancements. From the features such as Lion Recovery and Launchpad to a deep integration of rich multitouch gestures, Lion also signaled a shift to the Mac App Store distribution and away from the traditional model centered around physical boxes and media. This has at least been the case for Apple’s own software. Yesterday also saw OS X Server and Xcode releases (the latter is now a free download), the phasing out of the white MacBook, the updated Thunderbolt-equipped Cinema Displays rechristened Apple Thunderbolt Display and the latest Sandy Bridge and Thunderbolt Mac minis without an optical drive and MacBook Airs with backlit keyboard, most of which 9to5Mac outed in the hours preceding formal unveiling.

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