YouTube embed form borked by wordpress

When I add the <embed> form of YouTube link using the MCE editor (in raw HTML mode) it completely ignores the embedded HTML (e.g. the embedded YouTube video doesn’t appear) and it borks the rest of my blogs layout to boot.

Using WordPress 2.0.3. Plugins active, Advanced wysiwyg editor, Feedburner Feed Replacement, WordPress Database Backup, wp-cache,