First of all, that is an absurdly cumbersome solution to expect people to use. I might as well just tell them all to use Nathan's greasemonkey script if I were going to take that approach. Secondly, it won't work anyway unless I enable HTML in posts, which is a horribly bad idea and a security risk to boot. Thirdly, it DOES force embedded videos on people because anyone who posted such a video would be forcing it on everyone else who viewed that page of that thread whether they wanted it or not.
I'm not sure what vBulletin has to do with anything as this is not a vBulletin issue. SMF is perfectly capable of supporting video embedding with the right mods, but as I said before, that's not something I'm going to do in the middle of the season. There is a new version of SMF out, and I will likely be looking at both it and vBulletin as possible upgrades this offseason, at which time video embedding will be supported on a per-user basis, if possible.