You can now embed HD YouTube vids, as long as you edit the embed code with this bit added to the end of the URL's &ap=%2526fmt%3D22

Also if you just wish to watch the video in HD you can add &fmt=22 at the end of the URL

I have uploaded a couple of my HD shorts to test and you can see below that it does in fact work. I have included both HD and SD embeds to compare