I tried it with four files: two HD .AVI files, one .MKV and one .FLV. Only the .AVI files were playable, one displayed unacceptable slide-show performance, and one kept crashing.
Thumbs-down from me.
thats not good, is it hardware limitation?
I got a warning that was telling me that my iPad is too slow for this file (the one that played at slide-show speed.)
But after that, I tried a video that was formatted .MP4 and plays well in GoodReader. But VLC Player started slowly playing choppy video then crashed.
Give it a pass - for now. I use VLC Player on my Windows PC, and it is pretty good. It is just not ready for iPad use.