I updated VLC to the v3.x version and the process does still work as of this update.
I had tested with a v2.x of VLC and the process was broken. Youtube must have sent a threatening letter… **UPDATE 2019 May 7** This how-to is still viable with VLC for Mac OS X 3.0.6. I successfully used the “Airy” product to test downloads.
With recent updates Youtube killed downloads through VLC again.