It's not a one step solution and it's not automatic but unlike other solutions I have played with, it seems to offer the following:
1- Great video
2- The controls work while the video is playing
3- So far it seems reliable (other methods worked sometimes and not others)
Here is what I am doing:
1- I use DirectShowDump
to basically convert the .tivo file to a normal video file without all the protection garbage that makes it tough to deal with .tivo files in almost every video application. One other thing to note, it takes VERY little time to do this part of the process, very large video files are converted in minutes.
2- I then use this slick program Blackberry Video Converter
which seems to be a front end to mencoder
This is a free and reliable solution as far as I can tell so far.
DirectShowDump can be setup to "Watch" the directory where you store your tivo files from TivoDesktop and automatically convert them. This eliminates the need to do step one manually.
I hope this solution helps some others, I have spent a lot of time searching and testing different applications out there and for me at least, this solution rocks.