Sure you can overlap the menu on top of what’s below it,
Set <object param:
<param name="wmode" value="transparent">
and <embed :
Like you did…This will give you a transparent background for the .swf file (most of the time). Then use absolute positioning and an appropriate z-index in your CSS to force the underlying content up under the drop down part of the menu, which sticks out to the very edge of the dropdown part of the menu.
Here is a very rough draft of a site I’m working on which uses this principle. Forgive the rough nature, it’s just a proof of concept design.
Just do it! …. Or is that already taken???
Eye for Video