Our goal from the very beginning was to deliver a rich YouTube experience that could be officially promoted by Microsoft (or Google). It was for this reason that we never supported features such as video download or the playback of non-mobile content and why we have spent the past 7 months investigating alternative avenues of delivering the same rich experience via official means.
We were truly hopeful that we could resolve these issues however it has gotten to the stage where we've exhausted all of our options. Essentially, we have done everything in our power to go through official channels without any luck. We don't want to see the project that has consumed a year and half of our lives go to waste like this and so we've decided to re-launch Metrotube for free.
We hope the app receives a big enough response from the Windows Phone community justifying the need for Google or Microsoft to show us a little more support.
The issue here probably goes beyond Lazyworm, and impacts on the relationship and strategic plans that Google have for YouTube and how the content on the site can be used to bring people into the 'Google World'. Hats off to Lazyworm, though, who have kept trying to find a way round this issue. If the last option is peer pressure, then re-releasing the application is a smart move.