I have been working with media integration on the web for a long time. I have struggled with every kind of video player and I have had the best experience with Flash Video. I would not really suggest letting the client do any kind of editing of the video or even text. It is best to either work next to them while editing or edit and submit for review and notes. As far as display I just completed a web design were I used javascript, divs, css to do a modal popup to display the video player. Check it out here:

http://stage.mtssafety.com/subsites/tube/page2.aspx

Click on the lower left image to see a talking head type video.

Shawn