even further

Every site that allows video uploads, obviously enough, has internal video policies / guidelines usually over and above the minimum required by law. But they still trust on "report this video" because, as you say, the sheer number of videos makes it impossible to check all of them before uploading. The number of non-compliant, even if legal, videos, should be enough to convince you that a full rating system can never be developed.

And then, you got the issue of different jusrisdictions involved. One country can put a rating system in place over the sites hosted in it, no country, not even the USA, can enforce it in sites hosted abroad. Therefore, if ratings prove too much of a burden, new video sites will open in more lenient jurisdictions, or existing video sites hosted there will get a larger share of the market. Either way, the purpose of ratings is defeated.