Latest thoughts and recommendations:
I was too quick to whip out the 24-bit PNGs.. The graphics guidelines could look more like this:
1) Distant, solid background pieces should be JPG for file size, but GIF is alright.
2) Parallax layers of background should be transparent GIF, unless they absolutely need to be 24-bit PNG, ie clouds and objects with alpha elements.
3) Player and enemies could be transparent gif or 24 bit PNG. PNGs will increase the file size a lot and may perform slightly below transparent gifs, but they can also look a lot nicer with smooth edges.
4) Bullets and explosions will likely be 24 bit PNGs, with fun glow effects built into the art.
The in-Flash filters for glows and blurs should never be used because they hurt performance... Glows should be integrated into the art whenever possible, and blurs could be done with actionscripted filter effects if necessary.
I agree that my idea about a different programmer for each level would be stupid. In reality this probably is a job for one programmer, where other programmers could help with solutions for specific tasks, such as funcitons that perform fancy mathematical patterns if necessary... But they would really be more of a "special thanks" role in the project.
ALSO... I would like for NG to sponsor this game! If you guys are up for that, we should get a rough outline for how the sponsorship money would get split, as well as ongoing Flash-Ads and revshare revenue. The parties involved would most likely be one core programmer, one to several musicians, potentially a SFX guy if you go that route, and a bunch of artists, some (many?) who might not make the cut for long-term revenue sharing (trying to be realistic), while the main contributors would be the beneficiaries.
Involving a sponsorship could ensure getting a top-talent programmer involved. Otherwise I think it would be hard to find someone willing to put in serious hours, when they could be getting sponsored for doing something else. Whoever it ends up being, it would be preferred if they have already made some cool shooters here on NG, so this would be an evolution of their talent and not a first time outing.
Again, these are all just suggestions. :)