YouTube makes some decision about what resolution to stream to people. Clearly, the resolution of the video you upload sets an upper limit, but after that, they have some algorithm they use to determine the resolution they pipe through to you.
The person watching the video can also give an indication of what resolution they'd like to see. I don't know if YouTube feels obligated to guarantee that resolution that for you or if its just taken under consideration.
But I was able to see your video at 720p by changing the settings (the little gear) in the YouTube box. And it looked good!
You might give that a try.
Thanks,
Kim