Well it's clear the devs don't care enough about this to actually fix it and have even made posts hand waving it suggesting that people should just buy new hardware since they're not having the issue on better rigs.
It's quite simple though. x264 encoded video is simply CPU intensive to decode. If you cannot, don't whine, but buy a faster computer or don't play the videos (/seek alternative versions).
Videolan - VLC media player
Derk-Jan Hartman
Developer
Fact remains that other players like MVC, DivX, and ElMedia have no problems on the exact same computer with the exact same files that VLC now chokes on every couple of minutes.
Tried resetting caches and every single other suggestion made in this thread and others and have watched the builds for Mac decline for many years now. (the quote above is from a thread in 2009!)
After being a loyal VLC user since 2001 I'm sad to say I've been left with no choice but to use other alternatives that are free of these persistent performance issues.
Currently IINA is my movie player of choice. No grey screens, no stuttering, no freezing.
Hopefully they'll take this seriously enough at some point to actually fix the problem in which case I'll be so very happy to return and become a supporter once again for the app I've evangelized to everyone I know for all these years.
Given the attitude of the developers that's unfortunately not likely to happen.
So I bid you all farewell folks. It's been a fun ride.