That's probably not why. h264 would indeed use less cpu time than vp8 if there was hardware acceleration from the graphics driver available and being used for h264 but not vp8 (which is plausible). But software decoding can be pretty efficient in dedicated video players, and browsers and flash can be pretty damn slow at just getting decoded frames to display.
Back in 2010 I was using a computer I built in 2004, which had a single-core athlon64 3200. Watching standard definition video in Hulu was a blocky slideshow, totally unusable. But I could watch 720p h264 video at a decent bitrate, with mplayer, with no hardware acceleration.
One of the bigger differences is that browsers/flash have to put the video output as a surface that they composite with the controls on top and the rest of the page behind. Old-style video players actually render to a different hardware "overlay" plane and don't mix anything with it in software, and it makes a huge difference.
(My mplayer example is from linux, but I've also used MPC on windows a lot. You can change the renderer in the settings, and "overlay" doesn't support showing subtitles, but has noticeably faster/smoother performance. Well, back on windows XP.)