A PegII/1Ghz can almost do it - 640x360 only in fullscreen mode. But takes nearly 100% CPU-power and sometimes can get asynchrone (Pict/sound).
Better play these videos with YT and MPLAYER outside OWB. Takes on PEG2 only about 60% CPU-power.
Can be found here:
https://www.morphos-storage.net/index.php?page=Network%2FWeb&file=YouTube_URL_Extractor_2.1c.lha

More than 720x576 is not possible on Peg useing MPLAYER.
My G5 (1.8GHz/2.0GHz/2.3GHz) are all able to play hires-YT-videos in OWB-fullscreen mode - but NOT in windowed mode (stuttering) - only lowest resolution is possible. OWB needs too much CPU-power to play that in windowed mode