This was EXACTLY what I wanted to do with my Plasma install... flush mount it.
Ventilation
Suggestions I was given was to install fans on the sides of the wall and grills above and below the TV.
Plasterboard
Let the TV site a little proud of the wall and run it in just behine the frame.
I was put off the idea as the fans and grills would look a bit unsightly, the precision required on fitting the plasterboard to within mm of the TV frame would be

, and I'd have trouble getting to the back of the TV for cable access and power etc.
So I conceeded defeat and have built a recess in the wall and put the TV in there, leaving 10cm around the edge of the TV on all sides.
The TV screen is flush with the main wall, but all the cables, bracket etc are in the recess.