I updated yesterday to vlc 1.1.2 and today I also give vlc-1.2.0-git-20100801-0002-win32 a try, but I discovered on both versions many glitches on mkv (H264) movies. Video sometimes hangs for seconds is also sometimes cubically..
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I try´d with and without hardware accelaration and also with a standard config. Than I was going back to 1.1.1 and yes - all was ok again!
There is something wrong with the new version.
my dxdiag for some informations: http://pastebin.com/QQP4G6WP