I'm pretty sure AIR for android cannot be a live wallpaper because AIR for android is actually a runtime, and not a standalone app. the AIR for android runtime just doesn't have that feature.
That said, here is some helpful thoughts:
AIR for android is a bit of a resource hog at present (version 2.6) if you use it for a live wallpaper, it will (probably) cause significant battery drain.
Developing live wallpapers in java is not that hard. If you are used to actionscript 3, switching over to a java is pretty easy.
Check out Andengine - it supports exporting to live wallpapers. You canexport all of your flash assets and recreate your app pretty easily.