This is pulled from the EVO 4G ROM, but works just fine for us. There's even an option in it to always default to HQ, even on mobile. Install it and enjoy. Credits go to pardonmyfreedom for posting this up on AndroidForums.
YouTube HD from the EVO - Android Forums
Or, you can download the attachment to this post. However, you will need to rename it to YouTube.apk!
Either download it straight from your Droid browser, and click on it when it's done. Or, download it on your computer, put it on your sd card, use a file manager like ASTRO to find it, click on it, and install it.
You *may* get a warning about how a system app is being updated. That's cool, because it is