Also, you really think Squeenix will remove the videos off of youtube? Why? Its like making one LONG ass fan based video. If so, they really are being anal about keeping this under control.
This is a short and simple answer from someone who's been kicked off of Youtube 3 times prior for copyright BS...
Yes. Yes they will. You can take that to the bank.
And yes, .mp4's tend to be more space-efficient and higher quality than .avi's. If you're looking for space-efficiency more over quality, then I would suggest broadband quality .wmv files.
In terms of quality it goes like this, generally:
.mp4>.avi>.wmv
In terms of space-efficiency it goes like this, generally:
.wmv>.mp4>.avi
Regular mpegs are somewhere in the middle.
Of course whatever program you use can alter this. I've never used Virtual Dub before, so I can't speak for it.
And these are the only 4 video formats that I handle on a consistent basis, so if anyone knows more about other various formats that may help then do speak up.