Most likely the program you're using to rip the file from YouTube is saving it in a format, codec and/or frame rate that is great for playing -- but not so great for editing.
Open the file you ripped from Youtube in a program like G Spot or Media Info and then post to this forum the file format, frame rate and audio and video codecs that it lists.
Many codecs (Divx, for instance) are designed pretty much for playback and delivery only. They don't edit well.
Unless there has been recent changes, YouTube agreement does not permit for downloads (ripping) of its videos, except as otherwise stipulated or in the case when you are downloading video that you personally uploaded to YouTube in the first place.
When I lost the original file that I had uploaded to YouTube, I was able to download from YouTube itself a .mp4 version of it with excellent quality for use in Premiere Elements or elsewhere.