latest attempt cleaned up some:
PHP Code:
import flash.display.BitmapData;
button1.onPress = function(){
trace("WIDTH CHECK 1 : "+containerClip._width);
savePic(containerClip);
}
function savePic(mc:MovieClip) {
var snapShot:BitmapData = new BitmapData(mc._width, mc._height, false, 0xFFFFFF);
trace("WIDTH CHECK 3 : "+mc._width);
snapShot.draw(containerClip);
var pixels:Array = new Array();
var w:Number = snapShot.width;
var h:Number = snapShot.height;
for (var a = 0; a<=w; a++) {
for (var b = 0; b<=h; b++) {
var tmp = snapShot.getPixel(a, b).toString(16);
pixels.push(tmp);
}
}
//send to php for image creation
var output:LoadVars = new LoadVars();
/*
output.onLoad = function(success){
if(!success){
trace("PHP NOT FOUND");
}else{
trace("PHP SCRIPT FOUND");
}
}
*/
output.img = pixels.toString();
output.height = h;
output.width = w;
output.send("http://www.dmstudios.net/demos/makepic/makePic2.php", "_blank", "POST");
}
If someone could tell me if its a AS side or PHP side problem..even that would help me to narrow down my search.. 
thanks