This is a topic that keeps coming up particularly in the B2B space that I often operate. I prefer to err on the side of caution and recommend that the video itself be hosted on a website that email recipients are directed to. This can often be achieved by including a static frame of the video with a YouTube like ‘play now’ button over the top of the graphic. This usally gets a good response.
Having read around on the topic, some retailers are playing with embedding video in email again, as detailed in the following story:
http://www.retailemailblog.com/2008/12/am-inbox-first-embedded-video-in-retail.html
All I would say is, you should conduct lots of testing if you want to go down this route.
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EyeMail has managed to embed Video and Audio directly into the email of any recipient using Outlook (except 07). Only 4 – 15K in size with no attachments.
I’d be interested in getting your opinion on the technology. Contact me at your discretion