It turns out this is not resolved.
I turned off the auto-embed that was going on, so the content of a post internally is just something like:
But I had to turn on support of shortcode recognition or the old posts wouldn't show up correctly.
This results in:
1. Posts like http://douglerner.net/?p=2401 showing up ok in the web but,
2. When Subscribe2 sends out the notification instead of just sending out the URL itself (which is all that is there internally in the post) Subscribe2 sends out a message with a big black rectangle where the URL is!
Looking at the source of the HTML mail, it looks like Subscribe2 is taking the internal YouTube URL above and sending it as:
<span class='embed-youtube' style='text-align:center; display: block;'><iframe class='youtube-player' type='text/html' width='584' height='359' src='http://www.youtube.com/embed/FGANwLBiF-k?version=3&rel=1&fs=1&showsearch=0&showinfo=1&iv_load_policy=1&wmode=transparent' frameborder='0'></iframe></span>
Why would it do that? That's the cause of the problem.
The HTML source of the actual post doesn't have all that stuff in it.