yes
Download the youtube flv file using
www.keepvid.com.
Convert the flv to avi.
(I got my converter from a free torrent app download;
it's called "FLV to AVI Converter" and is published by ZZZ Technologies, Inc.)
At this point, I just burn the avi files to a vcd, but since you are trying to put this on an iPod, you'll have to make another conversion.
Further convert the avi to mov (quicktime) with some other converter...you're kind of on your own here.
(I don't know of any user-friendly converters that are readily available for free that will change flv to mov in one go.)
Also, being ignorant of iPods (although I have several Macs as well as a PC), I don't know if they will just play avi or not; I'm guessing that the answer is no, they won't, hence the need to convert a second time to an iPod-friendly format (.mov).