I've just watched another video via YouTube.
This video is a little over 27 minutes and I was able to watch it without interruption, or degradation of the video to compensate for buffer under run.
I should also add that I am much further away from the hub now and that like the last video, this one was watched in 720p.
So as a method to combat the lagging issues, just watch the videos via the YouTube site in SafarI instead of the app.
Its a solution until either Apple makes some changes in the next version of iOS, or Google pulls their finger out to update the app and correct this fundamental flaw.