Speed of light vs speed of sound
"Without me speculating as to what actually caused this crash, it is indeed possible that the "flames" that have been reported were from the impact. As the site looks like it is on top of some rising terrain, to an observer on the ground the aircraft may have looked like it was still 'in the air'."
Agreed.
Again, without speculating as to the cause of the accident (we shall leave this in the professional hands of the ATSB) but if you were looking up at the crash which was some distance away, you would expect to see an explosion, then shortly afterwards you will hear the engines stop, even though this may of happened at the same instance. As light travels faster than sound.
For the untrained (and petrified) observer, I could see how they could of mistakenly said there was an explosion before the engines stopped.