You seem to be reading “the purpose of this source code is to circumvent technological protection measures” as though it means “this source code can be used to circumvent technological protection measures.” There is a difference.
They would have to prove that Youtube's lack of a download feature is a "technological protection measure" against copyright infringement.
A lack of a feature can be rationalized in any direction. Ultimately not enabling you to download increases youtube's revenues because of people rewatching the same videos online.
Unless Youtube states explicitly that this lack of a download feature is for the purpose of copyright infringement then they can pipe it and stop disrupting everyone outside the US.
