H.264 is only royalty free for a period of time. Do you honestly want it to become the universal standard, then the moment the agreement expires having them start charging royalties?
H.264 looks terrible on Youtube (even on mobile devices), but WebM doesn't. Sure, Google has more reason to work on WebM support, but that doesn't change the fact that Google's HTML5 beta with H.264 is unwatchable.
However, we do know (and this change in Chrome is an example of that) they have all the reason in the world to make VP8 look better, albeit at the cost of using higher bitrate (larger filesizes) and/or slower settings to do so.
In other words, in no way a fair comparison.
As for the difference between quality on h.264 via HTML5 & Flash, the screenshots you showed obviously demonstrate some issue not related to the codec itself.
As in, it appears to not be the same video encode. You can go to any number of websites that use HTML5 h.264 and it look just the same as its Flash h.264 counterpart.
Fact of the matter is, H.264 destroys WebM (VP8) in any properly conducted test, in both quality @ x bitrate, SSIM & PSNR when tuned against it.
Here is a proper "Quality" test @ the same bitrate.
I would be all for this change and the abolishment of H.264s use outright, if VP8 could actually match its quality or at least come very close to doing so @ the same bitrate.
Unfortunately, it's going to take more time for the encoder to get itself up to that level.
Edited by Trigunflame - 1/11/11 at 9:10pm