As far as I know there is no way for us to prevent this. In order to watch a .SWF file it needs to be downloaded into your computer and then it's saved on your HD while you watch it. Now it's more up to the Flash artists to encrypt their Flash and there are ways they can set it so it will only play if the viewer is on Newgrounds.com. Meaning if some other site steals it and hosts it, it won't play on their site.
Many of these features weren't available to Flash artists in past versions of Flash, so a lot of the older Flash entries can be downloaded, editted, etc.
It's not really my department to try and improve our security. That's stuff LilJim and Tim deal with and as far as I know they always do everything possible to prevent this type of thing as much as they can, but some things can't be prevented short of making it so when you go to Newgrounds.com no one can view Flash. :)