Having looked at this again, I think the youtube mention was an inadvertent red herring by me, that has thrown us off the correct scent.
The real issue is not youtube at all. It is Canon's own ZoomBrowser EX software, which came with the camera. It has various steps that you go through when stitching movies and, when you reach step 5 'Save The Edit Results' it gives you, under 'Advanced Settings', the option to set the Image Size. The highest setting this goes to is 1280 x 720, whereas full HD is of course 1920 x 1080 (which is what I can upload - and watch - on youtube no problem if I don't stitch 2 movies together).
It therefore looks like this is limiting the resolution of the stitched-together video before it even reaches youtube and it seems incredibly odd that Canon would supply software with its camera that didn't allow the use of its full potential.
Last edited by ilesmark; 17 Aug 2010 at 21:20.
Reason: Left out some detail