Is there a way this can be accomplished?
I might have a solution from this answer:
You can also grab YouTube videos as MP4, hopefully that expands your player options. You can look into DirectShow CF for playback functionality, or host some other player in your app that supports MP4 or FLV.
Trying to play it back through IE mobile won't work, as the version necessary of the Flash plug-in with video playback support isn't available (last time I checked).
To get the MP4 file make a request to this URL:
"http://www.youtube.com/get_video?video_id=" + videoID + "&t=" + token + "&fmt=18"
To get the FLV use this:
"http://www.youtube.com/get_video?video_id=" + videoID + "&t=" + token
To get the Token call this:
"http://www.youtube.com/api2_rest?method=youtube.videos.get_video_token&video_id=" + videoID
I wrote an app that would grab a playlist of YouTube videos and sync them up with my PocketPC, I used TCPMP with the Flash add-on to playback the video (externally from my app). Although MP4 also worked on the PPC, I stuck to FLVs because at the time some videos on YouTube were not available as MP4. I wouldn't be concerned about this now.
Sadly my PPC broke, now I'm doing something similar on my iPhone but I had to switch completely to the MP4 format. VLC's FLV playback on the iPhone was too jerky for me.