Yes, it is.
This is about streaming, the hardware does not know or care about files.
And as the hardware is not part of an input or output device, but of the chipset, and not connected physically, you have to connect it virtually in between other components.
For example, on VGA cards or SS1 premium cards, this is done by the driver, but in your case you had to find another way...
the VLC is a streaming specialist in the first place, no wonder it can benefit from that hardware.
Wish I could use my SS1 hardware outside of DVB applications, but it is handled by a driver and firmware, that limits it's usbility pretty much, ecialy under Windows...
Perhaps you can find a way, to make yours available generally and system wide, without such nsty limitations
If I were you, I would really put some effort on this issue, step by step.