Boy was I happy to find out about this.... If you remember our Online Video Predictions for 2008 post from last year, our first was...
"1) HD High-definition Video - I expect Youtube and others to follow suite with the sites that already support High Definition content."
According to Wired.com, Youtube is currently testing out high-quality 1280x720 (720p) video playback. There is a simple hack to see this in action, and... it is the same hack that we posted about earlier in the year to test out the "High-Quality" mode before they rolled that out to users... namely by adding "&fmt=22" to the end of the URL string - IE - http://www.youtube.com/watch?v=Mgan4rt7ZHw&fmt=22
There is also a great post up on Cnet where the author did a test and uploaded the video above in H.264. The author states that it was not made available as HD right away but that it took about 15min. for the high-definition version to be available. The author hypothesizes that Youtube could be doing a second round of processing at the same time that it is encoding H.264 conversions for playback on iPhones.