The video raises some legitimate criticisms of cap & trade as proposed under Waxman-Markey, compared to a hypothetical carbon tax with rebates--and let's drop the euphemisms, here; a tax is a tax. At the risk of sounding overly cynical, I'm afraid they're ignoring an even more important flaw in either approach, while misunderstanding some basic differences between greenhouse gas emissions and the criteria pollutants their employer has regulated for decades.
The flaw lies in their assumption that the problems they identify are inherent in cap & trade, rather than in the political framework in which it has been crafted. For example, the offset loophole arises mainly from the politics that exempted certain emitting sectors from the emissions cap, giving these constituencies the opportunity to generate revenue by selling offsets against their uncapped emissions. There is no guarantee that the same politics would not distort a carbon tax system just as badly as they have cap & trade, and good reasons to think they would.
Ultimately we need the lowest-cost cuts from any sources, not just from fossil fuels, as they seem to believe. The cheaper the average reductions are, the more of them we can afford without harming the economy needlessly. Effective climate legislation depends on politicians putting a higher priority on achieving real emissions reductions than on rewarding favored constituencies via the mechanisms of either cap & trade or a carbon tax.