No, there's no AI in what you're talking about and it certainly isn't running amok. A classification algorithm flagged a video showing the inside of someone's body as not suitable for children. You could argue either that the algorithm made a mistake, or that the algorithm worked as expected and you disagree with youtube's policy on what is adult content.
> Are we already in an Orwellian Dystopia?
No, youtube aren't a government and they aren't forcing you to do anything, it would be weird if they were obliged to show any video that you upload regardless of the content. At worst, they're possibly giving you a bad user experience and poor customer service.
I'd recommend keeping a local copy of everything you upload just in case it gets deleted for some random reason.