VLC doesn't display BDPGS subtitles for M2TS files.
This is similar to Ticket #3075 (closed) and possibly related to Ticket #3592 (closed).
VLC up to version vlc-1.2.0-git-20100502-1250 (not tested all possible versions, but it exist for 1.0.5 and some subreleases of 1.1) doesn't show subtitles with M2TS files. I've tried: srt file, txt file, BDPG stream within M2TS. BDPG stream is correctly recognized in M2TS files with versions 1.1 and 1.2, but it is not displayed. It may be related to problem with time display for this container as reported in Ticket #3592 (closed). Observed on win32 platform, not tested on others yet.
Sample file for testing: http://rapidshare.com/files/382806746/subtitle_test_output.m2ts Screenshot of media info for file above: http://rapidshare.com/files/382812815/subtitle_test_output_media.JPG SRT file for sample m2ts: http://rapidshare.com/files/382814446/subtitle_test.srt