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Where people tend to get overly excited about this stuff, and where they get confused about law in general, is that they forget prosecutors, judges, and others involved with the law are humans and have brains. So if the ruling stands that only means that embedding doesn't AUTOMATICALLY exempt you. A judge can still tell the difference between stolenvideos.com embedding your content from hackers.com versus howto.com embedding a youtube video.
In the megaupload case we've read about emails where the officers of the company explicitly said they wanted to get more thieves to upload more stolen stuff. Prosecutors needed those emails because it matters - the law, and judges applying the law, pay attention to that stuff.
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