Whoa--so, I just did some searching on the internet and found zen's blog. Apparently, I've been using the wrong version of VLC! Version 1 is supposed to be a heck of a lot more efficient than Version 2. I simply used the latest because I thought it was the best.
Now, with the FireGL x3 coming in the mail, that 30" Cinema Display is very tempting.
You are correct. The latest VLC is absolutely the best. ver 2.0 wasn't fast but they optimized it further. Zen's blog on video playback is outdated I'm afraid.