There are two things to note as extra details that I don't think will matter but... First is I just copied the VLC.app folder onto a disk and this is how I've been using VLC when encountering this problem. It was installed on the same computer but in a different directory before. Second is the version of OS X being used is 10.7.4. I haven't tested it on any other Macs.
Here is the output when trying to play a regular video (and succeeding, but not in fullscreen):
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VLC media player 2.0.1 Twoflower (revision 2.0.1-0-gf432547)
[0x10020a640] main libvlc: Running vlc with the default interface. Use 'cvlc' to use vlc without interface.
Fontconfig error: Cannot load default config file
Fontconfig error: Cannot load default config file
Fontconfig error: Cannot load default config file
Please reply if you know the solution to this issue!