That works really well.
A couple of notes.
1. Turn off anti-alias (or you get a thin black edge to each word)
2. Set the aspect-ratio correctly in VLC if you have a widescreen monitor or projector
3. Depending upon the video, you might want to slow down the play speed of the video. I have an abstract AVI with floating colours (
http://www.reid.co.uk/zwbg.zip - 19Mb) that was given to me for this purpose which works well at 1/4 speed.
4. You need to set the background of the default style and info bar to the above values, or edit settings.ini to show:
Back Colour=65536
Info Back Colour=65536
Additional notes:
1. I tested this on v2.6 and not the current released version.
2. I am running Vista, and this turns off the Aero interface