Oh that makes sense.
Surely Apple found out they were letting users download YouTube videos..so they made the developers stop that I'm sure.
I don't know about modding this particular app...but if all you really want to do is download YouTube videos then you would have to jailbreak for that.
There are 2 paid ways to download YouTube videos.
YourYube 3: would have to find the beta and install with iFile. It adds download tabs inside the native YouTube.app.
ProTube: a complete YouTube.app replacement. Can download any YouTube video...can choose to download it as a video, or and mp3 format..and can save downloaded videos to camera roll. I prefer ProTube.
Then the one free way:
Safari Download Enabler: this is an addon for Safari that allows you to download literally "any" type of file from Safari. To download YouTube videos you would have to go to "m.youtube.com" find the video you want to download..then tap and hold on the white round play button til the menu pops up..in which you would tap "Download Linked File".