You might want to look into using a flash/silverlight based player on your site. Look at jwplayer (http://www.longtailvideo.com/players/jw-flv-player/
I think they have implemented the ability to link to youtube videos but your restrictions are:
1) Removing the logo/watermark isn't easy as the server is physically putting them on the image in most cases before it even reaches your visitor.
2) The license agreement I believe states for non-commercial use only.