I'm not sure if you necessarily need inDesign, but you almost certainly need Acrobat, which is still pricey. I haven't heard of another pdf publisher that allows more interactivity than simple forms and authentication, but I haven't really looked, either. And I am not sure if there is anything in the pdf licensing that would preclude someone from making one. In any case, a simplified WYSIWYG editor and some prefab Flash modules aimed at the prosumer-level market would probably be well received. Acrobat Pro (necessary to do the embedding) is US$450, and it doesn't even include the tools necessary to prepare media for embed. The Acrobat Suite is US$1200. Far out of reach for most users.

It's really a shame that there isn't an affordable solution that's cheaper than Adobe but more open than Apple. Maybe if iBook Author does really well someone will smell the money available in the < $100 software market.