MPlayer has no problem streaming youtube content, but better make sure you don't go higher than 480p quality, because 720p webm or h264 might be a bit too much (without tweaking, at least).
And of course, it's even easier to play youtube directly in OWB itself. As stated above, read carefully the youtube section in the readme (basically you just need to sign in on the html5 program and also add 2 userscripts in the script manager).
Ah, and this script was updated since latest OWB release: http://fabportnawak.free.fr/owb/scripts/YouTube_Fullscreen_Fix.js (it's needed to use overlay in youtube's own HTML5 player, instead of their fullscreen thing that slows us down a lot).
