Well, shoot. I've got this problem too. I'm building a page with a media player that uses both html5 and flash (flash as a fallback if html5 isn't detected. I'm using jPlayer - jplayer.org). I'm seeing REALLY blurry text on my iPad 2 when I zoom in.
I tried closing all of my apps except for Safari. It didn't work. I rebooted. That DID work.
Here's where it gets interesting: Before rebooting, I tried removing bits of code to see what was causing the problem. When I removed one particular bit of javascript (the part that handles playlists) and reloaded the page, the problem was solved. No blurry text. But I need that javascript. Interestingly, the blurred text isn't even in the part of the page with the media player. SO STRANGE!
Like I said, a reboot fixed it... but yeesh, that's not the solution I'm looking for.