I've played quite a few YouTube videos in HQ and not had any problems. If you restored data to YouTube using TiBu, you might try uninstalling it and reinstalling it without restoring the data to see if that helps.
and dalivk cache someone had an issue with gps not working yesterday as soon as he cleared dalvik cache it worked. cleanign out your phoen from old build up info is def good when switching roms and what not
You might want to give a different kernel a shot. If your phone can't handle 1100Mhz then it may not like something like HQ video that taxes its limits. Not saying that's the answer, just a suggestion.
Wow, I had the exact same problem, everything you just described. Even the low quality thing. The only thing is that I'm running Bugless Beast. I tried rebooting, uninstall and reinstall. I did wipe data and cache when I installed the rom. Nothing worked. however, when I installed Vevo and tried watching a video, it paused for a second then it played in HQ. I could see the HQ icon lit up green. I thought, cool at least it worked for Vevo. Then I went to youtube and hells yea it worked! Vevo seemed to iron out the hiccup that was going on. I don't know, maybe it could work for you?