I know I've muxed WAV with MPEG-2 before, generally by accident, but now that I specifically want to do it, I don't recall what program did it. (Maybe one of the Womble programs?) It's not technically accurate to mux WAV+MPEG, but it can be done. It's done all the time in a VOB container, for example. I was off with the
TMPGEnc suggestion -- it will deny WAV+MPG in a program/system stream. So nevermind on all of that.
Moving on...
Your issue still points to one of audio decoding, as the most likely culprit. Of course, there's still a chance that's not it.
Have you pulled down copies of the Youtube-encoded versions, and run them through an analyzer like Gspot, to see what format and bitrate is being used for the audio.
I've not had much need to upload content to Youtube in about a year now, so I'm operating from a slight first-hand experience disadvantage. However, the principles remain the same, and I do follow a lot of Youtube-related conversations in various places online. I have seen the decode issue before.
The video being "pixellated" is DEFINITELY a codec related issue. That's a classic codec issue. However, that tends to be a computer-related problem. In other words, your computer is the one with the problem there. But Youtube butchering the video is not outside the realm of possibility.