The following fix is specific to MagPress. For other themes, the same rules work in theory, but you will need to determine the correct class names for the image containers with Inspect Element.
Add the following to the Custom CSS:
/*Fixes YouTube oembed letterbox on blog list*/
.archive .blog-main-post-container .post-image{max-height: 160px; overflow: hidden;}
.archive .blog-main-post-container .post-image img{margin-top: -30px;}
/* Fixes YouTube oembed thumb letterbox on 3 column and 2 column widget */
.three-column .post-image img{margin-top: -20px;}
.three-column .post-image{max-height: 105px;}
.two-column .post-image img{margin-top: 10px;}
.two-column .post-image{max-height: 60px;}