Thanks to Dave Stanten at Adobe, for sending me the technote and resolving this issue: Tech Note
ColdFusion MX 7 Gateway Connection URL
If you are using Flash Remoting to access ColdFusion code, you may run into an issue where ColdFusion constructs an invalid URL when appending a jsessionid. If this occurs, the web server that is accessing your code could throw errors. The solution is to simply add a question mark (?) to the end of the gateway URL. Change /flashservices/gateway to /flashservices/gateway?. This ensures that the URL is created correctly.
I only had this problem with flash player 8 and 7 for the MAC, but standalone only. If I used the flash player plugin within a browser I was ok or if I used any form of the flash player on Windows.
Also, the tricky part is that the Coldfusion logs report the following, which is due to the malformed URL's:
[Flash Remoting MX]->Request received was not Flash-based (not of the binary AMF protocol)
So lookout for this tricky bug if you come upon it. A single character can make a difference. :)