Well I've stopped working on the game, I've learned what I had hoped to learn, but until 3dfa is fixed there really is no point in fooling with it any longer.
I got the bugs to show, by showing them right from the start. I added the collision detection for shots and the ship, scoring and levels, but now I cannot reset the bugs to the top to start over or level up. If you want to see it as is go to http://bretlanius.com/flash/spacegame.html

and if you want the source its
http://bretlanius.com/flash/1stgame.zip

There are numerous little things that I didn't fix like the shots keep going even after the hit a bug. I'm aware of most but if I want a game I'd start from scratch at this point, Seems to me there must be a simpler way of doing the bugs, as it is if you wanted to do more bug levels or more bugs the coding would get out of hand. I feel this may be a limitation of 3dfa that cannot be worked around as there seems to be know what to reference elements except directly by name.

I'll forward this to the Into3dfa site as an example of action scripting as well.