In more detail:
1. Because, like it or not, Flash is an established part of the web at present and it would be unacceptably frustrating for users if numerous websites stopped working. This would be the result because these sites often do not have a fallback option for users who are not using Flash. On the other hand, sites which only serve h.264 content with no fallback option are rare (non-existent?).
2. I, too, am interested in the answer to this question but not because I'm trying to prove that Google isn't ideologically pure.
3. I don't see how it wouldn't be better for open innovation if YouTube served video in an open format. Perhaps what John is really getting at is what does YouTube intend to do for platforms that will not support Flash or WebM?
4. Why isn't it valid to have Flash as a fallback option? This is only invalid if you work from the assumption that Flash is unacceptable (either because of performance or for ideological reasons). Utilising a ubiquitous closed technology while you help establish a new open technology is not an ideologically pure strategy but it may be one that will work.
5. People who are concerned about video codecs being controlled by for-profit corporations are happy about this but I don't think that's most people. I also don't think those same most people care.
I think John's frustration is really with Google wanting to make decisions on the basis of ideology (open is good/don't be evil) only when it is in Google's financial interest to do so (John has given examples in the past that open doesn't seem so good when it comes to Google's proprietary search algorithm). I think this is a fair frustration to have but it doesn't mean that everything that Google does is irrevocably tainted and can never be good. Establishing an open standard for video on the web is a good thing long-term. The way they are going about it isn't as pure as one might hope but sometimes this is how things work in the real world (see Obama and tax cuts/repeal of Don't Ask, Don't Tell).