There are a few methods suggested for doing this online, but none of them seem to work.
For example:
http://blog.makezine.com/archive/2008/11/youtube-in-720p
You can do this by adding a parameter &hd=1
to the video URL. That forces the video to start in the highest resolution available for the video. However you cannot specifically set it to 720p, because not every video has that hd ish.
http://www.youtube.com/watch?v=VIDEO_ID&hd=1
http://code.google.com/apis/youtube/player_parameters.html
UPDATE: as of 2014, hd is deprecated https://developers.google.com/youtube/player_parameters?csw=1#Deprecated_Parameters