On page 235 of the FW5 Reference (home print version) there are instructions for defining flexible height for an item. It says – among other things – to select the Height Can Shrink checkbox in the Item Output panel and has a screenshot of the panel with Type as HTML and underneath three checkboxes: Width can grow, Height Can Shrink, and Interface GIF files, followed by the Anti-alias drop-down menu.
But in FW, all I see in the Item Output panel under the HTML type is one checkbox, Interface GIF files.