It doesn't make much sense to compare 720p to 720p like that. What matters is the bitrate. So the better question is - does youtube offer better quality video at a given bitrate constraint now in comparison to the past?
What matters is the bitrate, and they're being overly stingy on bitrate.
But the source was 720p, and youtube's bandwidth tiers are tied directly to resolution and most of them are stingy.