You can do some more fine grained control with OpenDNS, but it's still an all or nothing for YouTube. There are some apps with YouTube videos they whitelist (including one from Google), but it's still not that great and usually geared towards younger kids.
This Circle seems like a good idea, I wonder if someone's done something similar for the open source router firmwares that are out there... but this would be a good feature for any router.
There are apps for Android devices and jailbroken iOS devices that will track time spent in each app, so that's a possibility. I've got something like that setup on my kid's iPad where it tracks time (doesn't turn off automatically though). On his computer I've got a program that logs off after a timer is up.
Yeah I have the same problem with YouTube, it's wildly inconsistent but I hate to block it 100%, the only option is to trust and verify.. make sure you can view the history and just check every so often that they're not watching anything crazy (that's what I basically do now), or have some kind of system where they can watch stuff made by people you approve, and if they want to add something to the approval you have to watch it first (we tried this but didn't work well).
I thought a curation system for parents might work well, kind of like how on IMDB or on other sites there are extensive reviews of movies from a parent point of view. Kids ask through a system "can I see this?" and someone previews it and green, yellow, or red lights it. Only problem is there's so much new YouTube content it's impossible to keep up. Plus people would abuse it and greenlight as much porn as they could.
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Uncertainty is an uncomfortable position.
But certainty is an absurd one.
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