I've been working with a designer to try to do this mockup: http://www.jbkempf.com/~jb/VLC_mac.png
There's a 90/10 rule - only put the stuff you use 90% of the time in the UI. The other 10% goes in the drop menu.
In the case of your mockup, I doubt people are EQing every movie they watch. They don't really use the library, so prev/next/loop/shuffle and lib are all unnecessary in a player view. I expect in most cases people use VLC to play a single video, something that a native player won't.
Further, your time display doesn't show total time - only position. Most players show current position and a total time/countdown toggle. The best include an end clock (i.e. your movie will finish @ 1:32am).
What new type of user are you trying to attract? Once you know that, it's pretty obvious what to do. Ping me if you wish to discuss (radley@ cloud.tv / vj.tv). I'm a big fan of VLC and build/design UI/UX & media players for a living...
P.S. Not just being a spoilsport here -- I do contribute to VLC, just through libavcodec.
(Except maybe the fact that the playlist's default setting always goes back to "shuffle" for some reason.)
Heh. Obviously as VLC's developer you know better, but FWIW I've been using VLC on Mac OS X extensively, as my primary video player. I don't think it's unusable, or ugly at all.. I can't be the only one, can I?