It took a little longer than I'd have liked, considering the simplicity of the patch, but I've finally added support for high-resolution videos in Totem's YouTube plugin.
On the top is the old, low-resolution video, and on the bottom is the spiffy new high-resolution video, automatically downloaded using YouTube's fmt=18 option if your connection speed is set to 1.5Mbps or higher. As per Bastien's testing, we can't use the fmt=6 option due to it not being supported for many videos.
The difference may not be immediately obvious due to the window being so small for the screenshot, but it is visible — just look at the left-hand side of the hut's roof. Enjoy.