1, privacy - they would have to send you a copy of someone's video for that. 2, I expect the end user bandwidth is worth more than the CPU time you'd provide, so the credits they could give wouldn't be worth it to you.
Well, there are ways around #1. It seems they could split a video up into enough chunks to make the bandwidth minimal for each party involved (it may not be worth it for /them/, however).
Do you seriously think you can get any kind of reasonable compression using only operations that are data-independent?
Video encoding tends to rely heavily on previous frames so it's not trivial to split a video into small chunks for encoding and still get a good result.