Wrong.
YouTube obfuscates the URL of the video stream for videos which have been identified as containing copyrighted material and are licensed for streaming only through the YouTube Web player or app. The copyright owner has made the material available under a license which permits ONLY that.
Youtube-dl contains code to decrypt the URL of the video stream in order to download and save the copyrighted material, in violation of the license.
Now let's look at some definitions from the DMCA:
(A) to “circumvent protection afforded by a technological measure” means avoiding, bypassing, removing, deactivating, or otherwise impairing a technological measure; and
(B) a technological measure “effectively protects a right of a copyright owner under this title” if the measure, in the ordinary course of its operation, prevents, restricts, or otherwise limits the exercise of a right of a copyright owner under this title.
We have to ask ourselves two questions. First, is the URL obfuscation scheme a "technological measure" that “effectively protects a right of a copyright owner under this title”? Yes, it is. In the normal course of its operation, it prevents the user from accessing the work except to stream it through YouTube's Web player or its app. The bar set by the law for "effective" protection is very low. If your "DRM" is a simple XOR cipher whose key is "hello world", then it "effectively protects a right of the copyright owner under this title", provided that it does its job of restricting access to anyone who doesn't know the key.
Secondly, does youtube-dl circumvent protection afforded by the technological measure? Yes, it does. The technological measure enforces certain policies by means of its decryption algorithm; youtube-dl reimplements the algorithm, but does not enforce the policies, allowing people to get around restrictions demanded by rightsholders like the RIAA and implemented by Google. Does youtube-dl have limited use other than to circumvent protections afforded by the technical measure? Yes, it does. If the URLs were not obfuscated, a simple HTTP client might suffice to download the video data. The primary use of youtube-dl is to get around the measures Google had put in place to restrict access to YouTube content (the same for other video sites).
Therefore... youtube-dl is a circumvention device prohibited under the DMCA, and is therefore ILLEGAL. Distributing it is a felony under federal law, punishable by up to five years in prison.
Go ahead. Ask any copyright lawyer. I'm sure they'll tell you the same.