Filter for wp_embed_handler_youtube not working

a little late, but it might be because this is a filter, and you’re adding it as an action,

try

add_filter( 'wp_embed_handler_youtube', 'bigger_youtube_embeds', 10, 4);
function bigger_youtube_embeds($embed, $attr, $url, $rawattr) {
    // alter the $embed string...
    return $embed;
}