As seen before, now official

"Today, to help its video content partners earn more money, YouTube will begin running overlay ads in YouTube partner videos embedded on other websites. To date, YouTube has only run ads against partner videos on YouTube itself, and with people viewing millions of embedded YouTube videos every day, this meant that partners were not generating revenue from their views outside YouTube.com. But now, YouTube partners will be able to capitalize on their popularity across the internet and generate revenue from their content no matter where their video lives."

http://adsense.blogspot.com/2008/11/now-serving-overlay-ads-in-embedded.html

Testing (with a video that shows ads when on YouTube):

http://www.youtube.com/watch?v=EQJD1ura7G4

[Update: yup, shows an ad when embedded...]