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.You sure the native app runs 720p over wifi by default ? On the iphone 4
Not from what I have seen, videos look like crap regardless of your connection with the youtube app.