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Im making a full flash website, and the background is going to have so much animation that any traditional method of reducing lag is going to be pretty useless(many animated symbols, alot of effects and transparencies). I was wondering would it help if I took the finished background and converted each frame into a picture such as a jpeg and then put it back in the flash so it wouldn't have to render all those things but instead just played a movie of the pictures?
Yes, you would effectivly be making your background into a video by having an image file of each frame.
The original idea behind flash was to be able to create motion and 'movies' with much smaller file sizes, this was done by storing everything as vectors rather than images. These days internet speeds are fast enough to be able to handle video with ease. Video also makes it much easier to run complex scenes as it takes less power to decode.
There is always a compromise between speed and file size (video will be bigger files, but usually easier to run)
How would I convert an entire swf video into a frame by frame animation with as many pictures as there is frames?
Import it into Flash, and save it as an image sequence.