Nginx could be added a RTMP module which will make it possible to do streaming of audio and video similar to software like Wowza or Red5.

Is Nginx really a Wowza replacement? Wowza normally uses AS3 on client side to do streaming and Java on server side. Can I use AS3 on clientside and some other language on server side to define functionality for a streaming webapplication? How does it work?

You can try Arut's nginx-rtmp-module..

At the moment, you cannot fully replace Wowza Stream Engine with Nginx due to advanced future of WSE such as restapi, server api, and etc. Actually, It's up to what you want to do with Nginx..