It's a way to bypass the automatic copyright filters at YouTube that look for watermarks in the video. If the video is distorted in some way (e.g., flipped, shrunk, pixelated), the watermark isn't where the filter expects it to be.
It's hard to get too upset about it, because they're honoring legitimate copyrights. They would be destroyed by lawsuits if they didn't at least make a good faith effort.
I know. And generally that's fine, like this stuff. But nowadays, some companies seem to get way too anal about some things that I think really should come under ' fair use'.
Like last year Sega went bit spastic removing videos of Sega games from YouTube, even footage from ancient games. My friend and I used to do video game retrospectives on YouTube, and our Sega videos were either removed or the audio was removed.