So, even if i use the iframe embed code, the youtube videos wont work on iphone/ipad unless the visitor has signed up for html5 beta?
That's correct. Currently, YouTube videos require the Flash plugin (which is not supported under iOS) to play, unless you've signed up for the HTML5 beta.
My friend has asked me to build them a WP site, with video that will work across platforms, so I'm just trying to figure out the best solution to offer them.
The plugin that I mentioned would definitely be the best option for that. And, if you provide the videos as both H.264 .m4v and Ogg Theora .ogv, they'll play under all browsers except IE without requiring the Flash plugin.