I refuse to use VLC when I am given a playback machine.
I carry a copy of ScreenMonkey and the latest codec pack. This way I can queue up multiple items in a nice interface on my local screen, whilst all playback happens on the external monitor, and there are no overlays to appear.
I haven't tried it yet in a live environment, but I recently stumbled across Screen Monkey (http://www.screenmonkey.co.uk/) as a free program for clean media playback. I agree completely with your stance on showing controls and/or desktop, regardless of the client's budget, and from my small amount of testing this bit of freeware could be a solution. Again I haven't used it in a live show yet so test thoroughly.
Any piece of VJ software or media server will do this and may be more suitable for your application (and cheaper) than QLab.
For free you could use Screenmonkey or VPT