This is a bit of a hack, but to implement what I am trying to achieve, I am first 'building a playlist' from individual small clips using mencoder to string them together into one file, this file is created on a ram drive, which is fast and does not 'stutter' the video that is playing while I am doing it. The file created is given a unique name based on the date/time, and inserted into vlc's playlist.
Once vlc starts to play it - detected by mc.get_media_position(vlc.AbsolutePosition,vlc.MediaTime).value - I then start creating the next playlist in the same way, I am using two ram drives and deleting the contents prior to creating the file, hence once played, the file no longer exists. Therefore vlc will not play this file again (my playlist is set to loop)
The very first file I play direct from the harddrive, and this becomes a default if nothing else is placed in the playlist.
The solution also has the benefit of avoiding the freeze frame effect between files as observed in my earlier post. At least it reduces the occurence to once every 10-15 minutes rather than after every 30 second clip.