[Anonnymouse]

Then nothing is broken, you just can't/won't use it as intended and required.

Just because it doesn't work in the fashion you wish it to, doesn't mean it's broken. Kodi is created for the public, not for you specifically.

Yes, but Kodi is created with one of it's primary purposes of being an alternative to walled gardens that all the commercial options are. Either they force you to use players that are crippled to sell features back to you, or they force you to use a player that they choose so they can track everything you do. This API based youtube plugin is now no better than a Roku or Smart TV. All your base are belong to us. It is absolutely ridiculous and unacceptable that anyone, Google or otherwise, is allowed to differentiate and penalize your functionality just simply based on the platform you wish to view it from. I can still pull up Youtube and browse videos anonymously when browsing from a full fledged PC, the fact that I can't do that from an open device. IP is IP. If it is free and anonymous on any platform it should be free and anonymous on any other. 

Browsing Youtube from a PC isn't anonymous. Google changed their sites' history behaviour some time ago so that unless you are logged in and explicitly selected the "don't remember history" option, they record everything. Short of going through a VPN, Google will know the IP address you are connecting from and can associate that with any Google accounts it sees from that IP address, regardless of the browser and privacy addons you use.

Google get your IP if you don't use API keys and don't sign in but they would if you were using API keys or were signed in with your Google account anyway.

When not using API keys and not signed in Google might be able to guess your account from your IP but they might not (maybe the case if you have more than one Android phone at home, or a connection using CG-NAT like mobile providers and some broadband providers). On the other hand if you use API keys or sign in then it allows Google to track your usage with much more certainty.

It's also debatable if the "don't remember history" option really doesn't remember it, or just hides it from the dashboard view.

Non-API playback is like opening a private window in the browser, playing a YouTube video, then closing it after and I'm okay with that and I'm happy that the YouTube plug-in author has made that option available.