After some research, we've found that this is definitely Google's bug on Android and was fixed by them in later versions.
http://stackoverflow.com/questions/14289848/embedded-youtube-player-getting-cut-off
http://stackoverflow.com/questions/10433865/problems-aligning-a-youtube-clip-centrally-in- an-android-webview
http://stackoverflow.com/questions/16273930/video-is-cut-off-on-the-right-side
http://stackoverflow.com/questions/13080578/partial-screen-webview-with-video-cut-in-half
We're discussing now whether a) we could work around this given our current architecture, and b) whether it's worth the cost for these older devices. Either way, the experience is very slow on the older API and devices that ran it when you have youtube videos embedded in web views. Those devices simply aren't powerful enough. If the publisher you're working with owns the videos, I would consider streaming them directly, outside of youtube, in a native video overlay (we support streaming video on Android). The experience and performance should be better.
Regards,
Dave