I finally figured a way to get VLC to accept DVD controls from the remote.
It’s all there in VLC remote 4.0 – so update now.
Please note though – you will have to run the latest setup helper again (version 2.5 or higher) even if VLC remote is already working for you. This is because it needs to make some additional changes to VLC’s files in order for DVD controls to work.
4.0 also features
-aspect ratio control
-audio track control
-multitouch sliders (more on that later)
And if you enjoy the update, please do leave a review at iTunes. They really help me.