I've been working on solving a similar problem, trying to hide the desktop or command line when playing a video. I'm trying to wrap a video player (omxplayer) in a curses window to fill the screen with black before running omxplayer. It works fine from the command line i.e. without booting into the desktop, but it still leaves a lot to be desired when running from the desktop, as I manually have to fire up a terminal and resize and configure it's window before calling my program. I have no idea how to rescale or move the video (as dknute says, I don't believe that can be done at the moment without stretching the video) but l have managed to hide most of the desktop, leaving only the taskbar visible (which you can set to 'autohide' anyway). At the moment I'm trying to figure out how to associate the required command line with video files so that opening them causes a terminal to automatically fire up in full screen with no 'furnishings' (menu bar, border, etc.) and run my program, but I can't find the relevant threads that I've previously seen on the forums! I'll let you know how I get on.
The details so far are in this (somewhat unrelated) thread:
http://www.raspberrypi.org/phpBB3/viewt ... 26&t=21992