Well, I put this video together and demonstrated this technique at a video workshop for our faculty last week, only to have it fail miserably in Internet Explorer 7. Of course. Go figure.
I have embedded dozens of YouTube videos in blogs, wikis, discussion boards and in older version of D2L (prior to 8.3) and have never had a problem. But the D2L HTML editor (which I believe is based on the open source TinyMCE editor) strips out the embed tag when you cut and paste using IE7.
This is a brutal bug, imho, and I’ve reported it to D2L as well as posted it in the D2L user community.
At any rate, here is the video, complete with a spiffy annotation (my first for a YouTube video) explaining this does not work in IE 7.