I doubt the video tag will support DRM or more advanced Flash features like dynamic streaming. Most sites don't need these features, but those that do will keep using Flash.
It's my understanding that the video tag will support arbitrary back-end video processors. There's no reason that the video stream cannot be encrypted with some DRM scheme that's decrypted by the backend. Please correct me if I'm wrong about this.
I think that's correct. The current draft specifies that an implementation (browser) may support any video codec or no codec at all (e.g. lynx). There's a lot going into the determination of which codec to use if more than one might be appropriate. As wmf mentioned about - DRM and dynamic streaming, I'm wondering the same but I think that can be handled by appropriate codecs. (Which may be just moving the plug-in issue to be one involving codecs, but let's hope popular browsers will ship with sufficiently useful ones.)
