mplayer shouldn't do fullscreen unless I ask it to. It's not a matter of the -xy option disabling fullscreen, it's a matter of nothing should have enabled it in the first place! If I say -xy 2, that's what I mean! I also don't think it makes sense for fullscreen to be the default, most files you'd play aren't high enough resolution to look too hot at fullscreen. You don't see RealPlayer defaulting to fullscreen do you? QuickTime? WMP?
As for mplayer developer priorities, they only made this (stupid) change in RC5, and it may very well have been a mistake actually.
