Interesting. I wonder if if that is the app itself that is the problem, or if the 4.4.3 update causes the phone resolution to be mis-detected. The best way to test that out would be for someone still on 4.4.2 to go to Google Play Store make sure their YouTube app is the most up-to-date version, launch the YouTube app, either load up a known 1080p video from the site or search for a video and use "1080p" in the search entry. I'd also be interested to hear from people with non-HTC phones running 4.4.3 that support 1080p video playback and hear if their YouTube app is limiting them to 720p video as well.
If we can rule out the Youtube app version being an issue then we can point it out to HTC and Verizon, but if all 1080p capable phones have the issue with the most recent app version then we should bring it to YouTube's attention instead. (There was a new YouTube version put out on the Play Store as of yesterday that is supposed to fix bugs, but this doesn't look like one of them). In the meantime at least accessing the YouTube website (desktop version) in an m8 Internet browser still allows for 1080p selection. :-\