Credit to Daniel-B for his reply to Youtube-HD-On-PS3-For-Free-Is-It-Possible? here: forum.videohelp.com/threads/330336-Youtube-HD-On-PS3-For-Free-Is-It-Possible. Hope that this may help people here.
There are presently no web sites that allows you to watch HD YouTube videos in the PlayStation 3 Internet Browser.
As demonstated by in the past, the current PS3 browser and Adobe Flash v9.x are capable of streaming 720p YouTube videos flawlessly (without the video stuttering, after a few seconds). Aiuati, which is Flash only solution, stopped working after YouTube made some changes to the site, most likely in an attempt to prevent video downloads. The site is live today, but viewing videos doesn't work.
Due to the lmited amount of memory available for the browser / Flash, 1080p video playback is presenly not possible and will typically crash the PS3, as demonstated in the past by Adobe's own video test page.
As you've found, the highest resolution PS3YouTube uses to stream videos in the JW Player is 480p (YT format 35, FLV)).
I actually wrote a script that allowed me to switch to the 720p stream (format 22, MP4) on PS3YouTube, but because the site features Flash adverts, which hog some of the available processing power, the results were rather variable. This is probably why jaqb has chosen not to actually stream HD content, even though the title on his site states "Watch HD YouTube On PS3 What size of TV are you using?
On my 40" 1080p 120Hz Samsung TV I actually find 480p playback is perfectly acceptable for YouTube videos, as there are very few that truly benefit greatly from actual HD. An exception is the excellent Home movie, which must be watched in HD to be fully appreciated and for this you can use PS3YouTube's download feature.
If you are a serious YouTube user, you'll also want to check out the bookmarklet in conjunction with the standard YouTube site, which allows PS3 owners to have a far richer YouTube experience than YouTube XL or PS3YouTube alone (uses PS3YouTube for video playback).
Hope this helps to explain why your ps3's are freezing up, 480p across the net, and using jw Player that youtube use to stream Hd is pushing it, and what this plug-in is, is a way of using a different swf player that can stream at a higher bit rate, but using YouTube's feeds. ps3youtube.com