I noticed while poking around YouTube, there are some videos labeled "high quality", and the playback features sharp video that has not been eaten up by the YouTube uploader. Here's an example:

Furefurepponpon!, the ending theme to Goshuushou-sama Ninomiya-kun

The video runs for 1:30, but note that the player shows over 9 minutes. There's a 6x discrepancy between the YouTube player and the actual video. Essentially this equates to 6x the quality of your average YouTube video.

Further explanation and tutorial links after the break. (EDIT: high quality MP3 uploading is also possible!)

Basically what the "hack" involves is an exploit of the video converter YouTube uses after you upload a video to the server. The YouTube uploader accepts several video formats such as DiVX and QuickTime, but always converts them to FLV, the Flash-compatible format.

Apparently the uploader also accepts FLV-format video, but the converter does not touch it -- YouTube posts your .FLV video as-is. This means, if you pre-convert your own files before uploading to YouTube, you have complete control over the video quality.

The time difference in the YouTube player occurs because YouTube calculates the length of the video based on file size, which I assume is encoded at a constant bitrate (Wikipedia says 314kb/s). A negative side-effect of this difference is that you must be careful when seeking within the video; playback will stop as soon as you attempt to seek outside the length of the original source video.

Regardless of the length of the source video, the final size of the generated .FLV must not exceed YouTube's calculated length of 10 minutes, since that's the cutoff for standard accounts.

Here's a direct-link a YouTube video explaining how to do this. It also provides additional links and other useful information in the video description: http://www.youtube.com/watch?v=08NI4cy4zik

YouTube is said to be rolling out HQ videos early 2008... But for now, this is the only(?) known method to get HQ YouTube before then.

EDIT: There's another software one YouTuber wrote that allows you to put high-quality stereo MP3s as a video. It uses a still frame that requires minimal video bandwidth then dedicates it all to audio. It's fully seek-able and allows you to share high quality audio without needing a personal server or BitTorrent. The group made by the creator, where you can find instructions and downloads, is located here: http://www.youtube.com/group/IMuTube