This seems to work for me-
My drive, a Pioneer DVR-109, is RPC1 and set to Region 1. The way I get DVDs from other Regions to work with VLC is under the CDs& DVDs section in the System Preferences I turned the auto play feature to off for video DVDs. This way you can just open the DVD in VLC and it works.
And now with the new version of VLC, the audio on DVDs consistently works!
Despite this, if you try to play a Region 2 disk with Apple's DVD player it gives you a warning dialog telling you that the disk doesn't match and gives you the option to change the region of the drive.
Can someone else try this to confirm that it works?