How can I tell if a Watch Later video has been successfully preloaded?
I assume you're talking about the Youtube app. As far as i know videos are only preloaded when your phone is charging and connected to wifi. When a video is preloading it shows a little white arrow pointing down on the bottom right of the video (when viewing your watch it later list). When it has fully preloaded it shows a green circle with a white down arrow in it.

The files are stored in /sdcard/Android/data/com.google.android.youtube/files/ then there will be another folder (mine is seemingly random numbers). Within this there is one file per preloaded video. As far as i can tell they aren't able to be played with anything other than the youtube app.

This screenshot shows videos that have been preloaded: