I think VP6 could be the key. If I was in charge of codec strategy at Google I'd be investigating at least these two things in parallel:
1. Will Adobe join us in introducing a brand new video codec (whether it's VP7, VP8, or something new based on them) to Flash, and if not...
2. What is the theoretical maximum quality you can wring out of VP6 without breaking backwards compatibility with the installed Flash base if you throw unlimited cash at it.
They can start up a skunkworks to build the next big codec to challange H.26_5_ if they want, but the need to do something soon if H.264 isn't going to become entrenched.
Some people will say VP6 is crap and that only better quality can win, but you'll note they only say that when something they like wins. For example, Apple fans point to the quality of iPods and iPhones as why they're successful, but point to idiot consumers, network effects and dodgy dealings to explain why Mac OS has a similar global marketshare to the perennial joke that is desktop linux.
Similarly apparently H.264 won because it's some kind of design-by-committe miracle baby, yet AAC isn't a stand out technically and coasts along on the coattails of it's video codec partners. And it's still not ousted it's inferior older brother mp3 in general usage, even with Apple's help.
Installed base matters. If Google make a video announcement that doesn't involve Adobe, I'll be very disappointed.