...it's unlikely. Really, really, really unlikely. In spite of its terrain and forest cover, Flores just isn't big enough to hide a population of hominids.
That's not to say that local observations should be ignored. People living in central and west Africa were well aware of gorillas and okapis long before western explorers "discovered" them. But the Congo Basin is many times larger than Flores, and between its climate end endemic diseases (especially malaria), Europeans didn't really make it very far into the interior until the 19th century. It wasn't really that long before they saw gorillas and okapis.
Indeed, this could be an example of a sort of cultural "memory" of Homo floresiensis, assuming H. sapiens arrived before its extinction. There are other possible examples. Communities in Madagascar describe mythical animals that, in many ways, resemble some of the extinct megafauna, including a gorilla-sized lemur.
Several years ago, some colleagues were excavating in some caves on a West Indian island. The locals wouldn't go anywhere near the caves because of the ghosts or evil spirits they claimed lived in them. When asked, the locals described these spirits as about 3 feet tall, pale, and making a sort of long moaning sound. During their excavations, the colleagues found the remains of a large flightless owl that appeared to have gone extinct fairly recently - perhaps as recently as the arrival of Europeans (voluntarily) and Africans (involuntarily). The closest living relative of this particular owl is pale and makes a sort of moaning hoot, so it's possible that early sightings of the now-extinct owl formed the basis of existing folklore.
(I don't remember which island was involved here. Several islands in the West Indies had flightless owls, each one descended from a different flying owl ancestor. All the coolest animals that ever existed are extinct.)
The story of the Rukh in Arabian folklore might be based on sightings of the extinct elephant bird, which though flightless and thus unable to carry off an elephant, was nonetheless a huge bird - much bigger than an ostrich - that lived in Madagascar possibly as late as the early period of Arabic contact.
(I described an extinct horned crocodile from Madagascar a number of years ago. It's called Voay robustus. It lived alongside the elephant bird. Alas, there don't appear to be any stories, Arabic or Malagasy, with such a creature.)
Behemoth and Leviathan in Job are generally agreed to be based on elephants and crocodiles, respectively. And the unicorn may have been based, at least in part, on stories told by travelers of Indian elephants, which (unlike their African relatives) have only one horn. (The unicorn described in the travels of Marco Polo is almost certainly based on the Sumatran or Javan rhino.)
So although I don't buy the argument that an earlier species of human persists on Flores, memories of ancient encounters may linger in stories told by people currently living there, nor would I be surprised that people on Flores might sometimes interpret unusual sightings in light of these stories.
Before anyone accuses me of being dismissive - that's not the case at all. I'm just realistic about the chances, and there are plenty examples, in a variety of cultures, of stories that might reflect long-ago encounters with unfamiliar animals. Or people.
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