I have an English Win XP, live in Germany and have a Chinese wife. So naturally, the movies we watch tend to be from all over the place. However, everytime I download Chinese subtitles from a site such as shooter.cn, the subtitles are in GB 18030 encoding, but most other subs (for example from http://www.opensubtitles.org) tend to be in UTF-8.
So already, having to manually set the font to a pan-unicode font such as Arial Unicode took some figuring out, but then having to switch the encoding everytime, restart VLC, then finding out that one chose the wrong encoding can really be a drag.....
So usually, when I need Chinese subtitles, I open the SRT file in Wenlin -- a tool for working with and converting chinese text (also has a dictionary) -- and convert it to UTF-8. Now here's the neat thing: I don't always know for sure what encoding the file is in, but I don't need to because Wenlin asks me to choose the correct one by rendering the first few lines in a couple of encodings (simplified and traditional Chinese, modern and legacy encodings) just as in the picture below:

Now, for those who don't know Chinese, all of the options will seem like gibberish, but for me it's directly clear that I need to click on the second option (GB, the PRC standard) because it's the only one where the Chinese characters make any sense. From then on I save the file in UTF etc and all is fine (well the rendering of the font kinda sucks, but that's another issue [screenshot of blurry subtitles using SimHei font here: http://localhostr.com/file/4qNE6KF/vlcsnap-2011-10-09-18h25m34s42.png])
Now my suggestion:
Somewhere in the subtitle choosing process (for example in the "Open Media" window), the user should be able to live preview the selected subtitle file according to the current settings (encoding, font, size, etc.). The basic settings could be modified in this window, and advanced settings could be hidden behind an "Advanced" button. There, the user could choose between different encodings, and the preview should automatically update to reflect the changes.
As the selection of the right encoding is pretty hard to do right automatically as far as i know, I think that it would be best to give the user the possibility to choose a default encoding as is the case now but also provide him with a simple way of making changes when the default is the wrong choice. Most importantly, this should not require the user to restart VLC.

