Rubbish. I do this all the time, works great.
Dual screens won't work if you're using iTunes, but let's say you are using VLC or something to show the videos. Simply movie the video window over to the other screen, then make it full screen (which is not the same thing as Lion's "Full Screen" command). Your playlist window and Finder windows so you can see and move your videos into the playlist should stay on the "first" screen, so the audience can't see them.
In fact, just to test this, I'm doing it as I type to you. I opened VLC, checked my prefs to be sure that "black during fullscreen" was UNchecked, opened a Stone Roses video and put it on my second screen (fullscreen). The playlist and controller (and all other windows and apps, etc) are on my first screen. This is in Lion, latest versions of everything.