Even with a dedicated server or VPS, installing ffmpeg may be impossible if your host does not allow root access. I love my host yet they do not allow root access (even on dedicated), so basically I am screwed.
For sites like mine that are just starting out, the cost to serve video is too high and I'm not willing to front the money for a dedicated server. I think the YT API will be perfect for people like me who need help kickstarting a video website. For established communities I think the tool you offer is great, although I could see established communities hit pretty hard by serving 5-10MB videos all day long. It's a whole different ball game.
I think it is great that you are extending vb to video, it is pretty much the wave of the future for many sites. I did alot of research on video sites before I settled on clip-share and there really isn't much out there right now. To save yourself some headaches, check out the clip-share.com site and forums. There are some things they do that are good and some things they do that aren't so good. From reading thier forums, you can get a pretty good sense of which is which.
Are you going to have category pages?
Looking forward to seeing what you come up with. Good Luck!
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