To continue and rectify:
I did some tests with
&modestbranding=1 and found some irregular (or just confusing) behaviour on the part of Youtube but basically this is what I learned:
The modestbranding switch seems to only work with the new iframe embed code (not with the old Flash embed code) AND only on browsers that default to the Flash player instead of the HTML5 player.
So far I have been able to get it working with the following setup:
1. Upgrade the Easy FancyBox plugin to the latest development version http://downloads.wordpress.org/plugin/easy-fancybox.zip
2. Use links in the following format:
<a href="http://www.youtube.com/watch?v=JW5meKfy3fY&modestbranding=1">link text</a>
or if you have short-url auto detection enabled:
<a href=http://youtu.be/JW5meKfy3fY?modestbranding=1">link text</a>
I tested this on my own website in the Opera 11, FireFox 4 and Chrome 12 browsers (don't have Internet Explorer) but again, this only works when the user is NOT participating in the Youtube HTML5 bèta test program and is NOT using an iPad.