So far the only part where vdpau is not yet fully supported is mplayer, which- if I'm not mistaken- is only used for m2ts-files. Xine as well as mythtv work well with vdpau. You will notice the difference when you play HD-content.
As for the tearing, it is my understanding that here nvidia is at fault, because this seems to be a long standing bug in their drivers. So I don't think you will have much success in having alphablending enabled and no tearing.