The VLC creators claim the player cannot be used to damage speakers.

That and hard clipping is obvious and sounds awful, so it should be apparent you're doing something wrong.

Whether it can damage the speakers depends on whether your sound system is defective. Dell deliberately ships defective speakers and doesn't cover the defects in its warranty. But it's not like the speakers will notify VLC of this fact, though.

VLC cannot damage anything more than any other player using the Windows APIs.

Yes it does. It makes too simple for non-techical user to make the signal distorted. Distorted signal can damage a speaker, even in low volume. It's irrelevat to blame "the others do it too".

I've seen it happen many times in meetings. 1. Presenter shows a video and volume is low. 2. Presenter adds volume from VLC to 200% and sound signal gets distorted. 3. Sound is awful, no-one can hear anything and people are doing nothing to fix it, because they think that speakers are broken.

Please VLC, fix your player so that it has good sounding limiter on the "output". It's not difficult.