Ok,
Three things

1. The WDTV Live DOES STILL REBOOT when acessing Youtube - though very rarely now - so that's something.
2:
Google/Youtube has some branding rules, it seems there are 3 levels of branding possible:
"YouTube Ready"
"YouTube Videos"
"Powered by YouTube"
This is the level of interface that the device supports - the top level is the "Powered by YouTube" - this is the one with most features.
The WDTV Live supports the "YouTube Videos" level, you can see the Youtube logos all over the interface now - remember they told is they added logos to the interface to "comply with YouTube requirements"
3:
If you make an account on Youtube and upload a video, there is a setting called "Syndication", there are two options there:
"Yes, make this video available on mobile phones and TV."
or
"No, this video should not be available on mobile phones and TV."
Default is Yes, but people can chose No - and it appears the WDTV Live respects that setting (probably have no choice)