ytDangler, I have an iPad 2, running iOS 5.0.1, and have the same problem as reported by other iPad users. The embedded video starts playing, but the youtube rectangle stays black. However, this is only for some embedded videos.
They seem to be embedding the youtube video in a different manner. The one that works is embedding the youtube video directly with an object tag, while the one that displays problems is embedding the video through an iframe.
I hope this helps, please let me know if I can test some situations.