Hinn 10. mars 2003 lét jonaegilsen þetta frá sér fara:

> I think this is just great. Looking all day in my norron grammatik
> books I see no O from AU.

This happens before Proto-Norse 'h'.

fljúga - fló - flugum - flogið

Notice the preterite singular - we have /ó/ where /aug/ would be expected.
This is due to the devoicing of consonants at end of words in Proto-Norse;
in this case /g/ > /h/.

flaug > *flauh

and then the change you're talking about happens:

*flauh > fló

The form 'flaug' arises again from analogy.

I don't remember other cases of of /au/ becoming /ó/ or /o/ in Old Norse.
But notice that /au/ and /o/ collapsed into one phoneme in Gothic.

Kveðja,
Haukur