1. Shoot the video as mpeg or quicktime with a digital camera or better using dv camera
2. In Flash CS3 create a document 320×240 / Frame rate 15 fps (eg : YouTube dimensions)
3. Go file/Import/video
4. Choose embed video, (select if sound or not ? select the file quality depending on output )
5. You might need to resize your footage (320×240) to fit the document size.
6. Bottom layer should now contain your video
7. Create 2 layers, one for vector animated content and another one for masking.
8. Now the tedious bit begins, in the mask layer create a vector mask using the drawing tool and draw carefully around the sweater (in that instance)

You should do that for each frame following each bit of movement in the footage.

9. Once that’s done the fun begins, in the layer under the mask (make sure it is highlighted as a mask it should be green looking, if not right click the layer to access its properties and select Masked.

Now you can start importing movie clips containing walk cycle, nested loop animation and also draw in real time frame by frame original stuff using your tablet & pen.
You can create several more layer under the mask to add content.

Once you are happy with your animation previews, you can export it as a swf  or turn it into an avi or quicktime , there are numerous application out there that transfert swf to video.