First, anyone with the tiniest modicum of common sense can tell that these pretend Flash sites are absolutely not in the slightest way legitimate content.
Second, providing services in any way, shape or form is, in fact, hosting. Providing DNS? It's hosting. Providing a cached version of the site? Hosting.
So if they want to be in the business of pretending to be not-hosting, then they have to stop providing services that without which web sites would cease to function. Are they now going to claim that they're not providing meaningful services to domains registered through them, and therefore they should not be responsible for people who are doing illegal things?
Probably.
Turning off your domain name is a different story. You are sunk until you can regain control of it.