I don't want to get into comparing VLC and Orbx, as they will be two different things. Tim has said on his blog that VLC will not have the scope of Orbx, but neither will it be a cheap knock-off.
From here on, this is my own opinions, and certainly not any official voice of VLC -- or Real NZ, for that matter.
VLC is first and foremost a Landclass addon. It's right there in the name -- Vector Land Class:) The 'desert' look of the default FSX is 90% due to the low resolution land classification, rather than the textures themselves.
Take a look at the Papamoa shots here -- you can see why people were disappointed with the default FSX, but you can also see that with some clever application of vectors it can easily lose the desert-look.
Although VLC won't be a texture-replacement scenery, there's no reason why it couldn't be, further down the track. VLC will include some new textures, to cover the inevitable lack of localised landclass/texture choices, such as NZ bush, so the framework is there already.
The scope for development of NZ in FSX based on VLC is pretty amazing. As I've said, a scenery of this scope only comes along every few years, and up until Orbx's announcement of a NZ down the track I would have expected it to be by far the most popular and successful NZ flightsim product of all time. Still, a bit of competition was always a possibility. This won't affect what VLC will be, but it may affect what it could become. What it comes down to is whether NZ simmers will commit to it.
VLC is Tim's baby, and Tim is a GIS kind of guy. He knows what vectors are, for a start, and he knows how to take topo data into FSX. I see things from a different angle -- to me, 'data' is a robot from Star Trek -- but I do know textures. There are other developers who not only have a unique skillset, but are seriously into NZ scenery as only a local can be. Ian Warren has done a lot of autogen placement for me and others, and in the process has turned autogen placement into an artform. All he needs are some local autogen object libraries and NZ trees, and these will come, once VLC is proven as a solid foundation for future development.