Can YouTube impose their rules on CC4.0 licensed stuff?

No downstream restrictions.
You may not offer or impose any additional or different terms or conditions on, or apply any Effective Technological Measures to, the Licensed Material if doing so restricts exercise of the Licensed Rights by any recipient of the Licensed Material.

My understanding is that by placing additional restrictions on the use of the music they are invalidating their use of the CC license and (in the absence of other agreements) making their distribution of the music illegal.

Offer from the Licensor – Licensed Material.
Every recipient of the Licensed Material automatically receives an offer from the Licensor to exercise the Licensed Rights under the terms and conditions of this Public License.

Thankfully the CC licenses allow me to receive a license direct from the licensor regardless of the distributor's legality.

Additional terms and conditions.
Your use of this music library (including the music files in this library) is subject to the YouTube Terms of Service. Music from this library is intended solely for use by you in videos and other content that you create. You may use music files from this library in videos that you monetize on YouTube.
By downloading music from this library, you agree that you will not:
Make available, distribute or perform the music files from this library separately from videos and other content into which you have incorporated these music files (e.g., standalone distribution of these files is not permitted). Use music files from this library in an illegal manner or in connection with any illegal content.

Except that youtube is placing these restrictions as additional terms and conditions and bypassing them may bar me from using youtube at all.

/r/creativecommons Thread Parent Link - imgur.com