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How can I tell if VLC is using hardware acceleration? I usually get around 20% cpu usage when playing h264 video which seems a bit high.

Here are my specs:

Windows 7 ATI HD4670 Phenom II x2 550

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You may need to be more specific in your question. Video playback can make use of hardware acceleration at different stages of the playback process. As @ChrisF mentions, VLC supports hardware accelerated rendering, however, as @Shiki mentions, accelerated H.264 decoding is not available in the stable releases. – heavyd May 26 '10 at 12:30
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I've just checked the preferences in 1.0.5 and there's an option for "Accelerated video output (Overlay)" on the simple settings. Make sure that this is checked.

On the "All" settings there's an option "Overlay video output" which has the tooltip "Overlay is the hardware acceleration capability of your video card (ability to render video directly). VLC will try to use it by default." Make sure that is also checked.

So it looks like VLC should be using hardware acceleration. Check you haven't turned it off. Your video card should be able to handle this.

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VLC is unable to use HA. It will be only avaliable in 1.1.0. You can use 1.1.0 pre release until then, it works.

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