altho it may do non flash videos for phone that dont have it, i believe convenience is one of the main reasons it is an app
just like facebook, you dont technically need the app cause you can open your browser and go to it, but the app makes it show up a lil different, the app also saves your info for instant log-ins
so id guess you can do the same with the youtube app, makes the whole database mobile friendly, and probly saves your youtube info into the app so its like a one-click youtube
as for the youtube just forever loading, if your running stock i had that same issue, idk but on my stock phone the youtube app NEVER connected to anything the entire time i ran stock, but would also insa connect if i went to the webpage, once i switched to custom rom it works fine now lol