Isn't it also thought that this kind of sequential torrenting is bad for the swarm's health?

I've always thought of how revolutionary it would be to have some kind of video hosting site where you distributed encrypted content throughout the users in fragments. When you would be using the client it would always be broadcasting to others, but you could enable or disable a background daemon to do it throughout the day. You could have it "smart allocate" the video cache, and it would keep local your favorites and could pull down your "watch later" videos in advance. It could buffer episode 2 when you are watching episode 1, etc.

I can't think of another way to democratize youtube - the costs of storing and broadcasting petabytes of videos are astronomical, but I think torrenting proves there is a lot of untapped bandwidth in the world you could take advantage of if you mask it over with a nice GUI. I guess that is the real downside of such an idea - it can't work in the browser, unless you implement a torrent client in javascript, and even then you couldn't maintain a local cache.

Why couldn't you maintain a local cache with JavaScript? Chrome and Opera already support the Filesystem API and it's only a matter of time before it ceases to be a working draft. But even discounting that API (which allows you to set a user authorized storage limit your application has read/write access to) there are already ways to cache > 5 MB of data in the browser; they're just hacks at this point.

If the FS API were standardized and broadly adopted then yeah, it wouldn't be an issue. I've never gone around trying to store greater than localstorage on all the browsers though to know if it would work.