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
I've managed to get this working by the following fix:
//www.youtube.com/embed/_YOUR_VIDEO_CODE_/?vq=hd720
You video should have the hd720 resolution to do so.
I was using the embedding via iframe, BTW. Hope someone will find this helpful.