I thought I would go over some of the basics. In a nutshell, most graphics chips made in the past couple of years now have the ability to accelerate h.264 and wmv3 at the very least through va-api and VLC in Maverick.

Now, when you ask for VLC to be installed, va-api, which is called "libva", will be installed with it. That library then needs one of three possible video drivers to be present to work. Two of the three driver packages are already in Maverick too. They are vdpau-va-driver (for Nvidia chips) and i965-va-driver (for Intel chips). The third package, for ATI/AMD chips, is called xvba-video. You will have to go here:
grab the latest package for your arch. Download and double-click it and it will offer to install itself.

Now, to be clear, the proprietary nvidia and AMD drivers must be activated and in use for this to work on those platforms. The open-source drivers do not support video acceleration on Nvidia/AMD at this point in time. Only very new Intel hardware is supported, from the GMA4500 onwards.

So to summarize -- If you have an nvidia graphics platform:

$sudo apt-get install vlc vdpau-va-driver
VLC must be told to use va-api. Open VLC, click Tools>Preferences>Video, and check "Accelerated Video Output". Furthermore, video filters/effects and deinterlacing will be done by the CPU, so turn these off for maximum effect.