Coinciding closely with Apple's release of Safari 5, touting full-screen playback of HTML5 video, YouTube have disabled their use of the WebKit-API that makes this possible: webkitEnterFullScreen(). They now believe that the browser itself should provide a full-screen button. I do not. But that leaves me with full-browser-window YouTube, or Flash.
Luckily Safari as of version 5 supports extensions! So I made one that turns the Full Screen button on YouTube back into a real Full Screen button. This extension only works on the HTML 5 player (flash does full-screen on its own) and there is one known issue: to prevent stretching 4:3 videos to 16:9 screens, it has to explicitly set the size of the video element. But this size then sticks and I don't think exiting full-screen is detectable, so after using full-screen the button next to it, changing the player size from smaller to larger and vice versa, is broken. If I ever find out how to fix that, I'll update the extension.
Meanwhile; download it here: FullScreenYouTube
Edit: It appears that MacOS X 10.6 or higher is needed to support full-screen on the Mac.
Second edit: I've just uploaded a new version that fixes a few issues, chief among which that YouTube broke it entirely.
Third edit: YouTube changed all the class names in the player. I've updated the extension accordingly.
Fourth edit: I don't know why, but YouTube's scripts starting running before mine, thus already setting up their event listeners before I got the chance to prevent that. I now add another button for the really full-screen option. The original button can be removed or left as is, using the preferences.
Fifth edit: Youtube switched from their white player to a black one, which made the button look shitty with the old designed-for-white icon. I've updated (v 1.4) so it looks more in-place again.