The fact that you have to rip the sprites yourself makes it take a long-ass time.
It's easier to import a sprite sheet into Fireworks, make the background transparent and then copy paste the movements into Flash as you use them, then animate them.
Another method is to download a folder that contains all of the single sprites of a character (Ryu, etc.) and then import all of the individual sprites into Flash. This is usually only used when the character you want to use isn't sheeted.
It's similar to your method, minus the ripping part.
iknw that method, but idw use it, k?