For a while now all video threads are basically just opening a screenshot of the video when you expand them instead of opening the video itself. I noticed this both for YouTube and Catbox hosted videos and you now have to first open the thread itself, and then click on the actual link of the title to open the actual page where it is hosted to play the video. Previously you could just watch them from within your feed without leaving it.
I think the only exception I've seen for this are redgifs that sometimes pop up from the few lemmynsfw places that do manage to federate with kbin / mbin, but those also have issues like rendering behind the posts below them.
I also noticed that video playback does continue when you close the embedded container, so you always have to pause them manually (which is ironically not supported by redgifs player).
The post you showed in the screenshot does look fine to me both in classic and compact view on an instance with latest.
But I'd agree not all of your concerns have been addressed. I don't believe redgifs work (well), so will try to look into that if possible, but might be out of my depth.
The playback continuing is interesting. I had made a change long ago to not download every time it was expanded / collapsed as before it would make a request every single time, instead I changed it to just hide and show it after the first load, so that sounds like a side effect of that. Perhaps there's some way for me to also indicate to pause media, I will check