How to add large self hosted videos to Drual 7?
To answer your question: Use the contributed Drupal 7 Video module.  

You will likely need to configure your server to allow for large file/video uploads.

I currently allowing video uploads that are up to 1GB using only the Video module, FFMPEG and a few helper modules to manage the 'video processing' workflow.

Most likely you will need to modify your PHP.INI file to allow large uploads.  Specifically max post size and max upload size.



As for a widget that allows you to select a file uploaded via FTP, I see several issues in the Video modules issue queue that look relevant, but no solutions seem to be offered.



This question was also un-answered months ago.  If FTP is a requirement you may need to write a custom module or contact the Video modules maintainers for a status update.