I just updated the extension to the latest version (1.7.15), and now it no longer shows a 1080p version for the video in question. Neither does the FLV 480p choice appear.
On the extension download page, the author notes:
* 480p and 1080p are no longer available as standalone videos downloaded from youtube.com. YouTube switched to adaptive streams and uses separate files for video and audio, which need to be merged to get a video file. This is more complicated and requires more advanced tools (ffmpeg), so I haven't added them yet.
Is Youtube causing all the heachaches then?