The only way to have a youtube video play inside your own app is to create a UIWebView with the embed tag from Youtube for the movie you want to play as the UIWebView's content. UIWebView will detect that the embedded object is a Youtube link, and the web view's content will be the youtube preview for the video. When your user clicks the preview, the video will be shown in an MPMoviePlayerController. This is the technique described at the link that Muxecoid provided (how to play youtube videos within an application), and this is (as far as I know of) the only way to have a youtube video play within an application. You can still have the Youtube application launch by passing the youtube URL to -[UIApplication openURL:], but of course this closes your own application which is often undesirable.
Unfortunately, there's no way to directly play a youtube video with MPMoviePlayerController because youtube does not expose direct links to the video files.
Basically, you want to be able to detect when a movie starts playing fullscreen and arrange your views appropriately. Then, when the fullscreen playback ends you want to be able to get your views back to how they are.
The problem is there's no documented way to hook into or detect when a UIWebView triggers video playback in full screen.
I said 'documented way', because there are some notifications you can use to detect when a UIWebView triggers fullscreen playback. You can just listen out for them and rearrange your views accordingly. However, I don't necessarily recommend this, because they're undocumented and subject to change (in fact, they have a spelling mistake in them up until iOS 4.3, see answers below).
// For iOS 4.3 and above:
UIMoviePlayerControllerDidEnterFullscreenNotification
UIMoviePlayerControllerDidExitFullscreenNotification
// For iOS 4.2 and below:
UIMoviePlayerControllerDidEnterFullcreenNotification
UIMoviePlayerControllerDidExitFullcreenNotification // (note spelling mistake)
Finding these out was a bit of a pain - there are actually several more notifications that get triggered when a YouTube video in a UIWebView gets played back. To find them out you'll need to drop a breakpoint on all posting of notifications, and then manually inspect the memory locations of those notifications to figure out their string names. I don't actually think anyone has pulled these out before, because when I google them I get nothing. But they do work, promise!
I hope being able to get notified when the fullscreen playback is entered/exited will be helpful, with the massive caveat that Apple could change this undocumented behavior at any time. Your app won't get rejected outright for using them (because you're not calling any undocumented methods), and I've used it in shipping apps. But it's still not the best idea in the world...may be the only option you have though.
Edit: To clarify, based off the comment below: they're not constants, so you'd need to put them in quotes if you were registered for notifications.
Best Answer
There is no notification being sent (also see this post: Event on view displayed change (Youtube MPMoviePlayerViewController)), but the web view will do something hackish: it will add a subview to the root
UIViewController'sview, make it full screen and play the movie there.Make your main
UIViewController'sview a view of your own, and intercept-didAddSubview:and-willRemoveSubview:. This way you'll be able to detect when the player is brought fullscreen.