Here's what I want to do:

Under Max OS X

Preferably in Firefox, or otherwise in any other browser.

Be able to click on an mpeg file that is residing on an ftp or http
server and have it play at a decent size in my browser window directly
- at the moment the QT Plugin Plays it at a very small size with no
option of changing the size.

Alternatively I would be happy if the file was automatically
redirected to mplayer or vlc for full screen STRREAMING playback. I
don't want to have to save and download the file - I want the file to
start playing in full screen....or at least if its embedded in the
browser such as with QT Plugin to be able to resize it. HELP.

Inside of Firefox, there might be an option in preferences to change
the media helper associated with Quicktime files to point to VLC
instead.  I looked online and it seems as if the Quicktime plugin
restricts changing the size of the playback in the browser window to
prevent HTML page rendering issues.  I've seen the same thing happen
with Windows Media files as well.

Another option is to try control-clicking on the link for the mpeg
file and have it open in a new window - probably won't work, but worth
a shot.

One final option is to control-click (right-click) on a saved .mov
file, then click "Get Info".  Then where it says "Open With:", choose
VLC.  Then (IMPORTANT) click on Change All...  That might force the
web browser to open the .mov file in VLC instead.

Good luck!

Yes I used the open with feature I think its jsut ridiculous that one
can't play directly in the browser at a scalable size and find it
ridiculous - have tried all these suggestions - thanks anway!