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VLC 1.01 works for me, but only with Internet Explorer, not Firefox.

PS: is it possible to change the VLC transcode options manually?

EDIT:

works with both browsers (latest MP 1.1 svn)

And you can edit "MPWebsrv.ini" to change VLC transcoding options..

e.g. if I set h264 codec via MP webinterface, I have no picture, cause Webif set Value to H264

but if I change it in "MPWebsrv.ini" into h264, everything works ok. 

(VLC 1.0.1)