Agreed. It looks like over-aggressive adaptive noise filtering, a smoothing filter and some flavor of unsharp masking. You're correct that this is targeted at making video content compress better which can cut streaming bandwidth costs for YT. Noise reduction targets high-frequency details, which can look similar to skin smoothing filters.
The people fixated on "...but it made eyes bigger" are missing the point. YouTube has zero motivation to automatically apply "photo flattery filters" to all videos. Even if a "flattery filter" looked better on one type of face, it would look worse on another type of face. Plus applying ANY kind of filter to a million videos an hour costs serious money.
I'm not saying YouTube is an angel. They absolutely deploy dark patterns and user manipulation at massive scale - but they always do it to make money. Automatically applying "flattery filters" to videos wouldn't significantly improve views, advertising revenue or cut costs. Improving compression would do all three. Less bandwidth reduces costs, smaller files means faster start times as viewers jump quickly from short to short and that increases revenue because more different shorts per viewer/minute = more ad avails to sell.
I agree I don't really think there's anything here besides compression algos being tested. At the very least, I'd need to see far far more evidence of filters being applied than what's been shared in the thread. But having worked at social media in the past I must correct you on one thing
>Automatically applying "flattery filters" to videos wouldn't significantly improve views, advertising revenue or cut costs.
You can't know this. Almost everything at YouTube is probably A/B tested heavily and many times you get very surprising results. Applying a filter could very well increase views and time spent on app enough to justify the cost.