Ah! That's because there is a div overlay to catch the clicks on the video in order to fix the play/pause. I couldn't find another way to capture any mouseclicks on the flashvideo through the Chromeless flashplayer itself, if anyone knows a better workaround, tell me!
For now a (dirty) fix, you can reach the flash video object itself by (right mouse)clicking on the Youtube logo.
Conceptually, I can think of two classes of solutions:
1. Put the overlay only over the part of the player you really want to catch the clicks for. It sounds you want it only for the play/pause so it might work. You'd need to calculate or guess where these controls are actually on the screen.
2. Detect whether the player is loaded and only if it is do you insert the overlay or enable the click event for it. This solution has a nice side effect of being able to tell the user they need flash enabled for yrou app to work.
I get a window.alert that says the player can't be found - maybe in that case you should assume Flash is blocked/missing and remove the DIV for a few seconds so repeated clicking has an effect.