Sorry for the late answer, I've been quite busy these last days.
To be honest, it's not the part I know the most / I work on. I will move this discussion in the general section as it's relevant for all VLC's ports.
Thanks for your effort, I'll deal with this topic a bit more intensively myself!
There are not many music apps that provide these playlists externally at all, so I honestly have not yet dealt much with the standard, if there is a standardized here at all!
I'm taking a closer look at AIMP right now. This is one of the few, but rather very old players that can store playlists externally.
These M3U lists are masked as you showed me, but strangely enough he understands my unmasked lists when playing without any problems!
So I still think this should be possible, because all the ones I tested so far have no problems with unmasked data and I still ask to fix this little shortcoming if possible!
VLC is such a great universal player, also available from fdroid, I don't want to look for other apps anymore, it's the best player for me besides handling external playlists!
Thanks to all developers, this great software!