Ultimately, every solution I propose will have issues. This is why I did not outline a specific solution. Because they're all stupid until one of them becomes the right one because of specific circumstances, people, etc. That is the nature of difficult problem-solving. If it was easy, people like you might be able to do it.
Here are a few possible solutions, though, off the top of my head right now - I'm sure someone closer to the problem could find more, better potential solutions:
1) Release the player code without the codecs.
2) Obtain a special license from the people that own H.264 to be allowed to release the source code.
3) Get some kind of agreement that the owners of H.264 won't sue Adobe and release the source code.
4) Do so without getting the agreement - maybe they won't sue.
5) Transmit ownership of the code to a different legal entity and release the code via that entity.
6) Slowly migrate to a new codec that can be released (e.g. Ogg).
7) Release the code with Ogg support without the H.264 part.
8) Buy the code patent.
9) Start a public relations campaign to convince the owners to open up H.264 for everyone.
10) Start a public relations campaign to convince the courts to overturn H.264 (say, on grounds that it harms the public good).
That's just off the top of my head. Yes, they all have problems, but they're all starting points - and there's no evidence that Adobe explored any of those or any others. If you can't think of twice as many potential solutions, your brain is effectively the size of a pea when it comes to creative problem-solving.
And if "management-speak" language stops you from understanding a good point, you're a fucking retard.
Downvote away.