Using it to play DVDs is also in voilation of the DMCA's anti cicrumvention provision. Don't let that stop you though...
Interestingly, libdvdcss, which VLC uses, simply cracks the encryption key if you have mismatched regions. This only takes a few seconds.
The encryption on DVDs was never intended to prevent piracy or copying. It's job is to force manufactures of DVD players to sign a contract to use the decryption code. This contract requires that the DVD player respects Region codes, and "Prohibited User Operations" (Ads on the disc that cannot be skipped, a-la tarzan)