Some links that may help you verify that all of your settings are correct
Importing Video http://forums.adobe.com/thread/1065281
-and project settings http://forums.adobe.com/thread/1112086
Saving & Sharing http://forums.adobe.com/thread/1137128
-Sharing to DVD or BluRay http://forums.adobe.com/thread/1137645
-Sharing for Movies http://forums.adobe.com/thread/1051093
-Sharing for Computer http://forums.adobe.com/thread/1058237
What are the properties of your source media, be it version 7 or 11....720p30?
If that is the case, what did you set in version 7 as the project preset?
What are you or the program setting for the project preset in Premiere Elements 11? If you are allowing the program to do this setting, then check out what it is setting 1080i (1920 x 1080 at 30 interlaced frames per second) or 720p30 (1280 x 720 at 30 progressive frames per second). If your source media are 720p30, then set the project preset manually before importing the media. Use File Menu/New/Project and remember to have a check mark next to Force Select Project Setting on this Project" before exiting the new project dialog.
If you have 720p30 source and you set for a 720p30 project setting, the video should fill the space in the Edit Mode Monitor.
Next, how are you getting your Timeline to YouTube...
a. using the Online/YouTube within Premiere Elements...if so, what preset?
b. exporting your Timeline content to file which is saved to your computer hard drive and then imported to YouTube at the YouTube web site...if so, how are you exporting the Premiere Elements file...Publish+Share/Computer/? and are you customizing the export settings under the Advanced Button/Video Tab and Audio Tab?
The answers will be in these details.
Somewhere along the line, your settings need adjustment.
Please review and then we will decide what next.
I went to the File Menu/New/Project and Force selected 720p60 and it worked from a quick test I did. I use gopro files 720p60 and 720p120 along with 720p30 from other cameras. I upload all videos directly to youtube from my pc to youtube. Looks like I'll have to do some more tweaking. Thanks for the input so far guys.
Please update us on your progress. I am particularly interested in your 720p120 in Premiere Elements project.