This is nothing new, but as a data point I just got the Jap. WinDVD installed and working. 960x540p for me also and that is through my MSI 7600GT with HDCP connected through DVI to my Infocus 4805 projector. I even tried it with only the projector connected, but no luck.
MSI 7600GT HDCP (93.71 drivers)
WinDVD HD Japanese version
One bit of good news was that it was only peaking at about 40% CPU usage playing King Kong, so no problems there, at least not at that res.
For now this is fine for me as my projector is only 480p. Hopefully it'll get fixed down the road.