@ sKiT75
Of course they have to compress. Look back a few years and see how they went from utter crap (unless you used &fmt=18), to introducing high quality, to 720p which is pretty decent. 1080p should look bomb. It won't be Bluray, but you are streaming this...
My complaint is how to upload 1080p videos, as other people have already pointed out. I get 26/22, about 3 MB/s each way with Verizon fios. The upload is too good for the Youtube servers to keep up. This is disastrous. Joking aside, I feel sorry for the people who live outside of Verizon's reach and for those who have to put up with dumb bandwidth caps.