I am in the planning stages of a new Flash game project and was wondering which language would be better to use? I already have a strong understanding of Actionscript 3, and hav
1) Yes, and no. As of 2.03 Haxe can export SWCs. This means you can write your code in Haxe , compile to a SWC and then utilize that SWC with Flash. Right now Haxe does not support SWC input, only output (though I believe they are working on this).
2) Yes, there are benefits to using Haxe - unlike Adobe's compilers Haxe actually does some optimizations during compilation (this has been a major bone of contention in the community for a while). In addition, Haxe utilizes some "hidden" new bytecodes that came into being with Flash Player 10 that currently neither Flash or Flex utilize - only Adobe's Alchemy (which cross-compiles from C/C++ source into SWCs).
The only "gotcha" that I know of is that it's kind of bizzaro ActionScript - things are just enough different that it will trip you up a fair amount. That being said, with features like generics and faster code that's small price to pay!