Youtube has great processing in most cases, the only drawback from using 'raw' footage from gaming is filesize (the uploader is very slow in my experience).
Personally I'd run a very high quality H.264 pass on it just to take off the 'losslessness' then it should be a more suitable size to upload (and not 4GB per minute or whatever raw game footage is these days).
I don't have any particular suggestions for software per-se, as all the editors I use output through h.264 already.
Quicktime has a re-encoder you could try I guess? the quality usually stays quite high I think?