I use Windows Movie Maker to add watermarks to my videos... but thats because I download only those videos that do not have any watermark on them ..... For rewatermarking you would need a video editor
I always download High Quality (.MP4) videos... Then after watermarking I decide the size and quality while publishing the video from Movie Maker...
FYI for people looking for the smae thing here are other BHW threads I found regarding this topic:
http://www.blackhatworld.com/blackhat-seo/youtube/88038-i-want-upload-1000-videos-week-how.html
http://www.blackhatworld.com/blackhat-seo/youtube/2343-how-make-1000-day-exploiting-youtube.html
http://www.blackhatworld.com/blackhat-seo/youtube/1883-youtube-traffic-thieves-blackhat-guide.html
http://www.blackhatworld.com/blackhat-seo/youtube/52683-what-best-software-watermark-youtube-videos-thanks.html
http://www.blackhatworld.com/blackhat-seo/youtube/92846-video-making-youtube.html
http://www.blackhatworld.com/blackhat-seo/youtube/91178-what-software-you-use-branding-video.html
http://www.blackhatworld.com/blackhat-seo/youtube/88717-how-do-you-remove-watermarks-videos.html
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