https://www.youtube.com/watch?v=3HpIZrOH4zc
Even though it's set in the future they manage to sell them as being retro cool. It's almost impressive.
I take the pessimistic viewpoint that ads are going to seep in no matter what. The harder you make it, they more they'll mask themselves. Personally, I'd prefer banner ads.
plus, with a transparent AR setup with proper overlay ability, you can in-reality block photons bounced off or emanated from advertising units (billboards, bumper stickers, old spice commercials, etc) from even hitting your retinas.
It's like how before a movie comes out, all the actors in the movie go on all the talk shows. Think it just happens by magic coincidence? It's contractually part of their job to appear and promote the properties they appear in so it drives up demand for their productions (movies/books/tv shows/congresscritters).
Don't respond to user seek commands until the add is done playing - at that point best they can do is block output and wait - which ends up a similar experience to just watching the ad for classic 2-10 min video youtube browsing or songs - for longer content buffering could work.
Google could transcode ads directly into YouTube videos, but they don't. They preroll or popover and both can be blocked. If YouTube did transcode pre-roll ads, we'd have an auto-skipper. If YouTube transcoded hard popovers on videos, well, that would probably upset more video authors than consumers.