For people who want to spend hours to configure their system, MPC-HC with madVR can give better upscaling and foobar gives better audio fidelity. Most of the rest is usual rants from issues that VLC had in the past, but that 1337 video people like to bring up to explain how their setup is soooo much better.
That's nice and all, except that I quite specifically wrote that equally simple yet better solutions exist.
Anyway, giving VLC 2.0.4 on Windows a spin, the audio glitch on pause is certainly still there. I guess I'll take your word on it being fixed in "development versions", but I don't think MPC-HC has had an issue like this, like, ever. H.264 seeking and ordered chapters certainly seem to work without any notable issues these days, though. Subtitle rendering still has some issues with complex typesetting, though libass is at fault there.
So there isn't that much of a difference anymore between say, a vanilla installation of CCCP and VLC. I'd still recommend the former for Windows users, though. Why? Because the former is a DirectShow playback solution, you can actually extend and swap its components at ease. Want to install madVR for high quality rendering? Sure, just download and install it and you can instantly use it in MPC-HC (which ships with CCCP) right afterwards. Being stand-alone has its benefits, but it certainly also has its disadvantages. Not to mention that with VSFilter you don't have to ever see that "Building font cache" (which will certainly not take "less than a minute" if you have lots of fonts) window!
It's not like every alternative requires hours of configuration. Download CCCP or SMplayer, push the button, and you're go.
VLC has ongoing minor problems (e.g. colorspaces) and a history of more major ones (e.g. buffer overflows in subtitle parsing). Unless you prefer the VLC interface (which would be perfectly reasonable, but I don't see people giving this as a rationale for using VLC), it's worse than either of the two alternatives I mentioned. And yet it's far more popular. This can be frustrating.
For people who want to spend hours to configure their system, MPC-HC with madVR can give better upscaling and foobar gives better audio fidelity. Most of the rest is usual rants from issues that VLC had in the past, but that 1337 video people like to bring up to explain how their setup is soooo much better.