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Perhaps I'm just dense, but as the videos are being hosted remotely--or that's the idea--why not just use a link to the hosted URL? Those people with devices that can play video also have browser-capability, and could then just as easily click a link and play the video from Youtube, Vimeo, etc.
I realize it's not as "slick" as having it play right inside the book, but I don't know that there's a way around your dilemma. All things considered, I mean. The link option has about as many pros and cons as does the idea of remotely hosting video; neither will work if there's no Net/wifi capability, and both will result in the video only being played in those devices that have the capability, and both will NOT cause those readers with eINks to pull their hair out.
Just a thought.
Hitch
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