You have to extaract that file then compile from source.
tar -jxvf filename.tar.bz2
It will than create a folder in the same place you extracted it, once you in there you have to compile it
Generally correct, except for a couple of things. One is that you need to install as root, or use sudo. Second, there are likely a lot of missing dependencies, so either you'll need to disable those features with options to configure, or you will need to install those packages as well (probably from source). If you configure those things out of VLC, then you are going to lose a lot of functionality.
When I have to do something like this, I take my smartphone (Google Nexus One) along with me, plug it in to the other machine (called tethering), Ubuntu recognizes it as a broadband modem and connects instantly to the internet, then I can install all this stuff from the repositories, including downloading and installing the dependencies automatically. If you don't have that, take it to a local WiFi hot spot and do the installation there.