I’ve just added an example youtube chromeless player to my site. I have to say I was really surprised at how easy it was to convert one of my existing players that used netstream and convert it over to play youtube stream instead. You can see my example here: http://www.innovativedesigns.org.uk/#/Video gallery/
The chromeless youtube player comes without any controls but the options are there to go ahead and add your own controls as I did. I am using the AS3 API for this. I will also be making a sample source available very soon.
More information about the chromeless player can be found here: http://code.google.com/apis/youtube/flash_api_reference.html