Here's an easy way to save YouTube videos and then convert them to iPod format using two free software programs. First, download SafariStand and iSquint. Install both programs and then open the YouTube video you want in Safari. When the video is completely loaded, press the Command key and mouse button. You'll see a contextual menu with an option to "Copy flv to Download Folder."

download_flv_file

Select that option and in a second or two your download folder will open with the new YouTube video in it.