Well, I just got xine installed. It works great with DVDs and misc. video formats (the binary codecs help of course), BUT... the X server restart issue came out of nowhere after two days of normal operation. I think it has to do with the fact I rebooted my box inbetween.
The problem is now 100% consistent. Log off current session, log in again as root or my regular user account, start xine... BAM, server crash. Once X has restarted, I can log in again and use xine normally though, it won't crash anymore.
Switching to runlevel 3 (text mode) for system start-up and lauching X manually circumvent the issue. Back to runlevel 4 I used the kdm autorestart trick above, looks like things are going well for now...
The system is 100% stable otherwise, wether in games (TuxRacer, UT & UT2003) or anything... To say I'm disappointed would be an understatement!