I've now had a chance to use Firefox 10.0.12ESR for a while (Pentium M running WinME + uSP2.0 + KEX4.5.2), aside from a bit of sluggishness and occasional lockups for various odd reasons, it works well enough. I think 3.6.28 is far more stable and reliable, but it doesn't have nearly as much support for newer sites as 10 does. I also tried RetroZilla 2.0 for a bit and although it is very fast, its codebase is ancient which limits it to a tiny pool of websites these days.
As for VLC, I've tried 2.0.5 quite a bit and it's very good, but a bit slower than good old 0.8.6. I haven't yet tried a DVD, hard to say how much better or worse the performance may be.
As for using both at the same time, where Firefox 3.6.28 and VLC 0.8.6 can do so quite well with marginal sluggishness, I find Firefox 10 or VLC 2 tends to lock up on occasion, usually Firefox but it might not have anything to do with VLC running.
I've also run a hacked version of Skype 3.8 along with Firefox 3.6 and VLC 0.8.6 in the past, pretty stunning for a 17 year old OS that hasn't had an official update since 2006.
I haven't come across any newer or better solutions for web browsers and media players. This is just the nature of using obsolete OSes. If you are willing to sacrifice a bit of site support for browser stability, I highly recommend good old Firefox 3.6.28. If you don't mind a slightly older but more reliable media player, give VLC 0.8.6f a try. I've watched DVDs before just fine. Actually, I use the b revision but I doubt it makes a huge difference.
EDIT: Just now I removed Firefox 10.0.12ESR and put back 3.6.28, it is a MASSIVE improvement in speed and stability. All that's really lost here is 3 years of internet compatibility (2013 back to 2010), which I know is eons, but if you stick to simple sites (forums, google, wikipedia, etc), it works amazingly well.