I seem to be having a similar problem with Youtube videos being poor quality that some others have reported. Just got my nook color today, still at 1.0.0, unrooted. Going to Youtube mobile site, all the videos play at about half of full screen size (landscape) and are very blury and pixelated. No chopyness or other problems. My WiFi is good - I use it fine with laptops on youtube and Netflix on the Wii.
Now the odd part: I went to
www.vimeo.com, tried some videos and they play just fine. Full screen and very good quality. Not perfect HD, but fully up to my expectations for this device. Playing the Nook videos from the B&N site also works just fine. So this seems to be a youtube issue. Is there some setting that I'm missing for youtube?
Also noticed that B&N included a link to the Yahoo movie trailers site, but I can't get any to load at all. I'm assuming this is a Flash issue, but it seems weird that B&N would include a link to a site that doesn't work with the NC.