OS News reports proper HTML 5 video support may soon be added to YouTube:
Google has now given an official response, and is hinting that support for HTML5 video may indeed come:
We've heard a lot of feedback around supporting HTML5 and are working hard to meet your request, so stay tuned. We'll be following up when we have more information. We're answering this idea now because there are so many similar HTML5 ideas and we want to give other ideas a chance to be seen.