I wonder if it violates Google TOS or is it possible if you embedd a google adsense ad into the video on your own video site?
Don't think that's possible. Google hardly accepts slight ads format changes, I woud not imagine them being part of a flash movie..
You could probably overlay them using CSS, remove them when the play button is pressed and show them again once the video has ended. I'm sure that's totally doable. Not sure if it complies with TOS, but seems like a good idea to me.
Definatly read the TOS more thoroughly and send the AdSense team an email to ask. You don't want to do that unless you are entirely sure you are able to.
Getting a ban is not too hard to achieve.. Emailing them should be the right start. My bet is they will say No to overlaying ads.
Yea, they seem to be really against any sort of modification that will give one publisher an advantage over another in terms of CTR. Perhaps if the OP was a premium publisher...
It is certainly doable, But I am not sure how google would like it, I would drop them an e-mail to be sure it is ok.