Good news:

VLC for Maemo 5 plays videos more smoothly than mplayer. The optimizations must be paying off.

More good news:

It is automatically put into /opt, leaving room in your base filesystem for more apps.

The bad news is, of course, that it doesn't have screen blanking, nor does it have a GUI yet. The keypresses don't work right.

But for playing difficult-to-play videos, it works great. If you don't mind tapping the screen every so often. I haven't tested streaming yet. But that should be seriously cool...