Number 1 is pretty much yes, they can. It's a diminishing cost, and the price of storage is very likely diminishing faster than the rate of video production is rising.
Number 2, agreed, we in fact know it can only be censorship (and not competing viewership) that drives the decision. That's my whole point.
YouTube content is created by human beings. There is an absolute bound to that (record everything everybody does all day long). No, its not geometric and can never be, right?
Storage and network charges are already pennies per terabyte-day. So currently and in the forseeable future, YouTube's costs will probably be administrative.
And that's all beside the point. There's not hard 24-hour one-channel limit to what YouTube can 'broadcast'. So their model is completely unlike a traditional TV station. So that analogy is flawed. So we can conclude, YouTube's decision to show (or not show) anything is based on completely different criterion. Pedantry notwithstanding.
1. https://xkcd.com/605/
Hard drives are dropping in price. That doesn't mean they will ever be zero.
1a. Youtube has other expenses besides hard drives. Bandwith. Server infrastructure. Employee salaries. To name a few.
2. It's not censorship. It's editorial judgement. Are you saying websites should be forced to host opinions they don't agree with? There is no "fairness doctrine" for sites like youtube.
Number 2, agreed, we in fact know it can only be censorship (and not competing viewership) that drives the decision. That's my whole point.