The parameter values "transparent" and "opaque" (that is, not the default "window") prevent keyboard users from using the TAB key to access and control embedded objects. Please see my blog post for details and related links, "Flash wmode considered harmful" (September 2009), http://freear.org.uk/node/22 - as I note there, most content creators/sites do not need "transparent" Flash objects (and the YouTube embed code does not contain it), so removing this parameter should not be an issue.
I have found the related bugs/issues
MDL-5938 "Transparent background for swf", and MDL-19231"Add filter to process YouTube..." (Moodle 1.9).
The solution is to remove the following line in function "mediaplugin_filter_youtube_callback", in filter/mediaplugin/filter.php:
<param name="wmode" value="transparent" />
Patch to follow. Yours,