I haven't personally kept Oscars but I've had friends keep them and I've personally seen their breeding behavior. I'd be content to leave it for actual Oscar keepers answer the question, but comments so far are about tank size, not Oscar breeding behavior... that does resemble the mating behavior I've seen, including the head shaking. The comparative gentleness of their behavior also resembles courting behavior to my eyes-- have you seen them when they actually want to kill each other? At some point you should see some rock cleaning, I'm not seeing that in the video, but tell me I'm wrong that the lutino one appears to be eyeing (what looks like) the flat rock in the front corner, not what she or he would be doing if this was a true fight. If it is courting behavior it doesn't guarantee a spawn at this point, they may still be a bit young.
Yes, absolutely, they'll need a bigger tank at full size, but they look like they've still got a good bit of growing to do and the courting ritual would be similar even in a larger tank. It's just what they do, which is similar to other SA species I have kept. Severums, for example. It's your call, but separating them altogether may or may not upset their progress in bonding and this could start all over again when you put them back together, even in a bigger tank.