Hi Luis,
I understand your wish to do something different, however, at the very least there will be a lot of push back if not outright rejection of your channel if you don't make the UP button and the Back button exit video playback. For users with older devices who don't have a back button, the up button is the *only* way out of anything other than exiting the channel completely with the Home button, so hijacking that button for something else is going to be a problem, unless you make it very clear with onscreen directions exactly how the user can end playback. You may need to exercise some creativity to make it work in a way that is acceptable.
I believe Boboc.TV implemented a UI similar to what you are describing, and that UI has both a way to pop up an overlay-control strip with the up button and still allows the user to exit playback with the up button.
One approach to this might be to use the down-button to engage an interactive mode in which the up and other buttons have a different functionality from "exit", which closes after a timeout if there is no user input for a number of seconds.
- Joel