3 things - as 2.0 and .mp4 really make no difference - the question is, is the video encoded in h.264 and are you using Flash Player 9.0.124 or higher? If so, it should work.
The third thing, and the thing it sounds like you're having trouble with is something called a MOOV atom contained in h.264 video. Very basically put, this is like a block of code that contains header info that Flash needs to read in order to play the video. In some cases, this MOOV atom is placed in the front of the encoded video which makes everything fine, but in others it's placed at the end so Flash needs to load the entire video before it can play. The simplest way I've found for fixing that is to run your video through this great AIR application: http://renaun.com/blog/code/qtindexswapper/
. It will swap the MOOV atom to the front of the file and it should be fine.
Oh, and a 4th thing - you're really trying to progressively download - not stream. A nitpicky difference, but one of my (several) personal pet peeves..