Wow... how didn't I notice that. It really does work now. From UI's perspective it would be even better if one could still skip forward/back, change volume and brightness while still having screen rotation locked, but hey - we can't have it all :).
Thanks VLC team for all the dedication and good work. You're the best.
I think you can still do all that stuff by dragging your finger on the screen with rotation locked? Left/right sides are volume/brightness, bottom is seek.
EDIT: This only works if you change the preference to set playback orientation to "landscape", not if you lock orientation.
On Windows Phone, the option does not disable auto-rotation (thus, forcing portrait mode). Instead, it locks the screen to the current rotation state, so you can stay in landscape mode even if you rotate your device. Found this to be much better.