If you look at the screen not directly is normal it has some 'sparkling' all over, I think it's due to some sort of protective layer or it's simply the sensitive layer. Many 770 owners complained against this issue. Well different is if this sparkling comes from your screen, i.e. some sort of pixelling defect. If you look straight at your screen with dark colours, you should not notice it. If you have a totally white screen and sees a light concentrical rainbow all over it... well, that's it! It's not a perfect crisp screen such as - for example - ipods.
Concerning youtube videos, I never tried to look at them via 770, but if they are Flash 7+ based, you have no way to look at them using 770. So, nothing more from my part than quoting texrat, sorry