I was able to do it without a computer or jailbreak.
Been a while since I tried it, might wanna give it a whirl.
Choose your YouTube video, use one of the sites that allow YouTube conversion online...it should give you a download link to the video.
I downloaded the video with the Good Reader app from there (copy the link in safari, then paste it in the URL bar with the letter g in front of the link, ex: ghttp://www.blahblahblah.com this will open the download in good reader)
It worked before.
Sorry if this post has loads of mistakes...kinda late here. xD