hmm ... i don't know much about VOBs. think i've seen that they can be played without any encoding (as you said)? as far as a playlist, the app would be similar, but it would generate a .asx file that points to files on the file system, instead of doing any streaming. then when you run that .asx file it would play each file in turn.
the .asx file spec is in the Windows Media Player 10 SDK, under metafile section.
<ASX version = "3.0">
<ENTRY>
<REF HREF = "C:\Documents and Settings\KC\My Documents\My Videos\mpg\powerpuff girls justice league comm.mpeg" />
</ENTRY>
<ENTRY>
<REF HREF = "C:\Documents and Settings\KC\My Documents\My Videos\mpg\Episode 216 - Broodwich.mpg" />
</ENTRY>
</ASX>
so it would play the first file, and then move on to the 2nd. tested it on my 360 and it worked