Is there anyway I can generate revenue using YouTube
embed tag on my site?
Maybe some kind of AdSense integration to ads showing up in the videos?
AFAIK, the only way to get paid for YouTube videos is by becoming a YouTube partner and posting original content. I'm guessing they have some standards of quality, so not just any spammer looking to make a quick buck will be able to qualify. Most YouTube partners are filmmakers, artists, etc.
The only way to make money embedding other people's videos is to use AdSense and post video units on your site. These videos come from YouTube partners, so the revenue is split between you and the Youtube partner who created the content.