If Google's going to be further tightening YT to the degree where they might roll out DRM platform-wide as opposed to just limiting it to movies on the platform, I'm about to seriously start looking for stuff to watch on PeerTube because YT is not long for the world and will probably start pushing away anything that isn't AI slop at some point in terms of content.
UPDATE: A workaround has been released for this issue.
Does grayjay rehost content from YouTube or are they using the YouTube backend for streaming video?
I would be quite annoyed if anyone used my website as a host for content that's being consumed on another website.
A few years ago (and to a lesser degree nowadays) you occasionally came across images which wouldn't work if you "hotlinked" to them on another website. Images aren't a huge deal anymore but video absolutely is.