What do you mean by edit? Are we just talking about combining the chunks and then rendering? If so, that's doable. The advantages of sending it to WMF however is that someone there have direct access to the server and can upload quicker / accept bigger file size.
Yes, that's related to copyright and permissions of the material, but what about that first sentence:You shall not download any Content unless you see a “download” or similar link displayed by YouTube on the Service for that Content