The screenshots I attached are from the Hebrew version of "The Neverending Story" DVD.
You can see that the translations menu in VLC first appears incorrect, or more precisely - doesn't appear at all - only the highlights appear when moving over them.
If I wait until the main menu clip ends and then restart, then enter the translations menu, it appears fine, except for the highlights, not placed correctly.
In the chapter selection menu you can see how bad one of the highlights really looks. Some of them, BTW, appear fine (all those in the right, for example).
Also, the highlights don't align once I change the aspect ratio.
Just tested with VLC 2.0.2 and it seems to work just fine, especially in 1:1 zoom.
In larger scales some text shaped menu elements highlights seem to be a little above the actual menu item they should fit in, but I think it might be because the DVD menu was only designed to and tested on original PAL resolution.