From what I gather from reading these forums is that TiVo selects the mobile version of a YouTube video. It seems unlikely that good quality HD content would be flagged for mobile usage. With that being said, yes, TiVo should "fix" the selection to not exclusively include mobile flagged content for viewing.
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Yes it does seem to be a mobile version. I use youtube a ton on my tivo and that would be the biggest app I would like them to update. I know netflix on tivo isnt great, but at least it gets most of the netflix content unlike the youtube app. 
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