Exactly! You have to download a video in order to watch it. How else would the pixels on your screen know which colour to be at what moment and how else would the membrane of your speaker know which way to oscillate? What they don’t want you to do is to keep a local copy of what you’re downloading – they want you to delete it, the moment you’re done watching it.
Screw them, what goes on in my computer is none of their business. I own my hard drives, and I delete files on my computer when I decide to (or by accident, when I mess up 
), they can’t force that on me.
If you too want to watch videos the Krešimir WayTM, this script could be useful to you: Post your handy utility scripts! - #147 by Kresimir