The ATI drivers have yet ANOTHER feature to work around this. For anyone interested (even for th future) it's located in the Multia Media Center Configuration application. It's the "Enable Multi Monitor Support" option under the DVD tab (first tab). This in fact works for any format using the same codec supplied by ATI for DVD playback.
Cool, this works with Media Player Classic and shows streamed off my ReplayTV unit. I set MPC to be fullscreen on the second monitor, and it seems it's using the ATI MPEG2 codec.

Nice thing about MPC is that is dosen't break full screen mode when I am clicking on things on the first monitor.