We can just say that it’s become a group project, right?

First of all, you claim that “basically all screens display 72dpi(ppi to be exact)”. That’s literally almost the opposite of the truth. That would be true if “basically all screens” were 800×600 and 14″ diagonal. Or 11″ at 640×480. Most monitors now are between 95-110 PPI (although the iPhone 4 is 326 ppi!).

Second, PPI is completely irrelevant in this scenario. It doesn’t matter what you set it to. At all. If you create something that’s 226×622, 1 pixel in any graphic = 1 pixel on a monitor. Period.

So what’s the PPI setting for? Notice the dropdown where you can change between the different units? Pixels, inches, etc. If you want to create a graphic that is exactly 1″ wide on a 100ppi display, the graphics editor calculates that you’ll need an image that’s 100 pixels wide. This is only useful if you’re creating a UI for a specific device and want to know exactly how big image will APPEAR to be. For example, the iPhone 4 (326ppi) will need a 326 pixel wide image to appear 1″ across.

This why PPI/DPI is mostly used in print, because it actually does something useful. If I want to print an 8×10″ image from my printer, which I can set to run at 300dpi, Photoshop says I’ll need an image that is 2400×3000.

Thanks for pointing it out.

basically all screens display 72dpi(ppi to be exact).. which means that if you put a higher rez image up there.. it will usually cause all kinds of scaling issues.. plus it really doesn’t help in clarity, thats just a myth. what you’ll endup with is an image that will take ages to load. 

heres what you do(add this as the last step in your tutorial if you like) when your design is complete, don’t use the “save as” a jpeg option. use the “save for web” option, it will save the image in 72dpi, while giving you options to increase or decrease the quality(it displays your original image and the web optimised version side by side for comparison while you tweak the settings). 

note:web optimised should be viewed at 100%, zooming in will always make them look grainy coz they arn’t meant to be viewed that way.

“YouTube backgrounds are a little difficult to work with because instead of aligning left, they happen to align right.”

Looking at the image you have and what is shown after with the YouTube player it proves it is center justified. 

This is the youtube channel I just did.  
http://www.youtube.com/user/BridgeTownChallenge
I right justified and left a an image on the right that was part of my Twitter background. When I first did it they barely showed and were outside the borders of my screen.  If I adjust for the middle 960 pixels not counting I can position the images right where I want.  I have not tested this with Cosmic Panda yet.

It really seems like you made this much more difficult than it had to be.

It seems like whenever I do it, the quality seems just a little fuzzy on my end. (You seem to have hinted that you do a great deal of design work, and I just want to be able to apply it to future projects.)

Also, that is kind of what I did. I actually just took a screenshot of the basic YouTube layout and then built around it.

What I do when making custom backgrounds (for any service), I start with a screenshot of a good looking design and set up guides or blocks of color and design on top in something like photoshop. Works for any service.