That quote focusses more on the lack of an open process than the lack of an open format, but let's not split hairs. Your original post was mostly right. I'd not read the above before.
I never saw a formal funding proposal from Gnash, though.
I do remember some discussions in the last couple of years about us bundling Flash like Chrome does. That has the obvious "it's not open source" issues. Gnash got mentioned in that context; I think people were concerned that the Gnash implementation wasn't complete enough and it would just end up being a massive bug and time sink if we made it the default in Firefox for the whole world. I guess "fund it" would have been a follow-on possibility from that line of argument but I didn't see it raised.
We've taken a lot of pain from Flash in one way or another (hangs, crashes, security issues). The Flash problem has no good, simple solutions. :-|