1. How do you set an initial state when controls are also interactive? This is probably easier to do now that I have a floating property editor window. At the time, all interactions with components were direct.
2. If something is interactive, like a switch, what's the best way to handle dragging it with the mouse? Previously, the "wall plate" of the switch was the only draggable part, but it didn't seem like the best choice for usability. Also, it limits the visual design because draggable areas must be large enough to be discovered. I've considered having an extra draggable handle appear when a component is selected, but I'm not sure if that's ideal.
Forcing a separation between a design perspective and the simulation made the answers obvious. However, now that you've made me explain my reasons, I can see that it might be possible to go back to the old way without sacrificing too much.
I'm done installing any future versions of Flash, especially with all the crap they've started bundling it. I fully expect that Flash 10.2 will include anti-virus software, toolbars, and something that periodically reminds you that you're ugly.
Wires between nodes are laid out automatically and can not be routed on a grid. In a big design (not that this is meant for that) things will get messy quickly.
You have to click simulate to see the results of your circuit. This is annoying. These circuits are simple and the output can easily be detected whenever a change is made.
Another useful feature is the have keys (0-9) mapped to switches. Testing, for instance, a four bit multiplier would be much easier if you don't have to operate the mouse so much.
I hate to recommend another piece of software, but I think the authors can learn a lot from it's features. Atanua (http://sol.gfxile.net/atanua/) is a cross-platform logic simulator that has all of the above features. It was a great tool when I needed to quickly prototype something for a class, and I still recommend it to students in a class I TA. It hasn't been updated in a while, the OSX version has to be run through Rosetta, but I can't see any glaring omissions the author made that would make it unusable.
Finally, it's 2010, this would make an awesome HTML5 app instead of being written in Flash.