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i think m.youtube streams its HQ videos with this kind of 'connection aware' compression, that many apps use, while the youtube app gives you the full 720p m4v experience.
That explains why it takes forever to download on the native YouTube app. I just checked some of my own favorites and found the same thing. All this time I just didn't open my eyes a little bit more to realize it is clearer on the native app. Thanks for clearing that up.
 
What I do with embedded videos is that I would let ie open on the Youtube app and then favorite it. I have the "Favorites" page on m.youtube.com bookmarked to the homepage and I just open the favorited embedded on it afterward.
 
Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_1 like Mac OS X; en-us) AppleWebKit/532.9 (KHTML, like Gecko) Version/4.0.5 Mobile/8B117 Safari/6531.22.7)

I can't access m.YouTube though. It says to enable java script

Go into Settings> Safari> Turn JavaScript ON
 
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