This information is outdated, please see the post on YouTube5 Version 2.
Update 1.2.5 The issue with video’s not loading due to the change in the YouTube video URL has been fixed.
This extension removes the need to use flash on YouTube by converting all videos to their HTML5 video tag equivalents. It also has the added benefits of decreased CPU usage compared to flash, and the removal of in-video ads.
Update: A few of you have asked why this is better than the YouTube HTML5 beta, and the reason is very simple: YouTube will only display an HTML5 player for videos without advertising in them, so videos from Vevo or many other popular sources will still use flash. As a side note, this extension will not function if you are a member of the HTML5 beta, as the page formats are completely different.
Also, many people have been asking about viewing HD video with this extension, and I’m happy to announce that this is already possible, I just failed to mention it before. Simply go to Preferences -> Extensions -> YouTube5 and you will be able to select your desired video format (360p, 720p, or 1080p). If your selected format is not available, the next largest will be used.