Apparently YouTube is on the verge of making a big announcement since there seems to have been an announcement about the announcement (nice way to get double the press). And search engine Mahalo has already created a page dedicated to news on “YouTube High Quality” with a video (embedded below) showing an example of how it would work. All I can say is finally! Here’s hoping that’s the big announcement. I love YouTube, but man, can you think of a place online to watch lower quality video?
*Update* Here’s a screenshot of the YouTube video with the high quality option. (Look right under the video for the new link that says “Watch this video in higher quality.”)
*Update 2* YouTube made its big announcement here, and it has to do more with developers.

For those who don’t want to write down the HQ video link at the end of the video here it is.
And to answer your question, no, I can’t think of a place to watch lower quality video on the web.
Another note on this. I analyzed the video stream and the codec is still “Flash Video” (aka Sorensen Spark) not a higher quality one like h264.
Here is the breakdown on the differences in quality for the video in the link:
Video Resolution: 448×336 (about twice as many pixels)
Video Bitrate: 628kbps
Audio Codec and Bitrate: mono MP3 96kbps (way higher quality)
Audio Sample Rate: 44khz
Video Resolution: 320×240
Video Bitrate: 315kbps
Audio Codec and Bitrate: mono MP3 8kbps
Audio Sample Rate: 22khz
Ok, my last comment for a while. This isn’t the only “HQ” video out there on Youtube. Here are some more “HQ” videos.
One more tidbit I found. If you add &fmt=6 to the end of the video’s link (often even ones that don’t show the option to switch HQ) it will load the HQ version. If you do &fmt=18 it will load an MP4/h264 version. There isn’t always a HQ or MP4 version however. The example below only has standard and MP4, no HQ FLV.
Example:
http://www.youtube.com/watch?v=cpMu6yyH6pY
http://www.youtube.com/watch?v=cpMu6yyH6pY&fmt=18
I can barely see a difference. Maybe the sound is a bit better, but the quality still sucks. I dont know how youtube got so popular. Some body could have created a site just like youtube, and had perfect video quality. Infact that can be done now, and youtube wont be so dominant anymore.
But still, I think youtube should have high definition video quality.