You're mixing up m3u and m3u8
In the custom channel you still need a m3u pointing to the m3u8
If you want record Sky News stream from You Tube stream I do following for 1 hour:
/usr/local/bin/ffmpeg -i `/usr/local/bin/youtube-dl -g https://www.youtube.com/watch\?v\=9Auq9mYxFEE` -c copy -t 3600 -f mpegts /Users/sebastian/SkyNewsoutput.mpg
Okay I’ll ask 
I don’t suppose there’s any chance devs will consider building this in? VLC supports reading YouTube watch urls for example
Edit: I guess OP already asked and implicit answer was no
alright i struggled with this a bit but read up about HLS here: HTTP Live Streaming: HSL Player for Android | Toptal and got channels to work with hlstube. in case it wasn't obvious to anyone else...
hlstube serves up what is referred to in that toptal article as a "media playlist" (as opposed to a "master playlist"). channels wants a "master playlist". so when you go to add your custom channel, choose "Text" for source, not "URL" ...and put just the hlstube url (i.e., localhost:8080/_/https://www.youtube.com/watch?v=sOmEvIdEoID) in the text box. you can add #EXTM3U headers as well but i didn't find it to be necessary.
thanks for the suggestion @tmm1!
edit: fixed url example