If you are using VLC 0.9.4 (my package here) you will probably have noticed that it is (for now) impossible to embed the video window into the main VLC window. The “embed video” preference setting has no effect.
Actually, this has been done intentionally by the developers. VLC seems to crash at unpredictable occasions when the video is embedded. This is a Qt4 issue that might be solved in Qt 4.3.0 according the people in #videolan on Freenode.
The code commit to disable the embedded video is here in case you want to revert it in your own build: http://git.videolan.org/gitweb.cgi?p=vlc.git;a=commit;h=fff7615fa9bf44f90ac5573eb2964bcb51e4ac3c and the ticket opened for this issue is http://trac.videolan.org/vlc/ticket/2136. Yesterday a commit was made in the code to check for the availability of qt-4.3.0 at compile-time and re-enable embedded video in that case: http://git.videolan.org/?p=vlc.git;a=commit;h=9c26b8e2a04468aa4b4a158f072d760a991932db.
I will try a rebuild of the VLC package with qt-4.3.0 statically linked when I have time. If anyone is faster than me, please let me know if it causes issues for you.