Hello,
I grabbed the VLC 1.1.0-pre1 7zip package and ran it on Windows 7 64-bit desktop machine with Intel Core 2 Quad chip.
First problem is with DXVA2 support. Without DXVA2, the video plays back smoothly, even though there is 15% CPU usage. When DXVA2 is enabled, CPU usage drops to 5%, but the video is extremely jittery and it just doesn't play back smoothly.
Second problem is with videos with softsubs. When playing videos with styled softsubs, the video plays back as if it keeps trying to catch up to the audio, frames are being dropped a lot. There was also a lot of audio hiccups.
Third problem was with the Win7 integration. It didn't properly scale the window to fit the Aero Peek thing. Though, it does work...
Here's a picture of the issues: