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Small update: I've rooted my NC and there's been no change to Youtube video accessed through the web browser (built in or Dolphin HD). Still small, blurry and pixelated. But now that I'm rooted, I can use the Youtube app and videos through that are very good.
So for an unrooted NC, my experience was that Youtube vids look pretty bad. I don't know how to change that other than rooting and using the app instead of a browser.
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