If it's not it's darn close. I've seen some very sharp videos (no noticeable compression) and they take FOREVER to load. Load the same video through m.youtube.com, it's high quality where the compression is noticeable and it loads quickly. There's an obvious difference in file size.
I don't know what videos you're watching or what wifi your network you're connected to, but if i'm connected to wifi some of the videos i've watched look and sound pretty damn good. Not to say that automatically means it's 720, but it makes me wonder...