This is what i like to do.
1. Create a button in TinyMCE (I know this part -> http://codex.wordpress.org/TinyMCE)
2. When i click on this button, it will pop up asking me for a youtube video URL.
3. I enter the youtube URL (http://www.youtube.com/watch?v=jflEPT-oLDD). It will translate to httpv://www.youtube.com/watch?v=jflEPT-oLDD and paste it in the post as text.
My question is the second part and the third part. I have no clue how to do that.
PS - the third step is to translate the URL so that Youtube Lyte can undertand the URL.