I did the v-diet twice (28 days long) . Once as prescribed and once a year ago where i made a whole foods version of it. Meaning I used the same number of grams of carbs/protein/fat as the shake diet but used whole foods instead: Chicken, cans of Tj's Salmon, eggs, almonds instead of the flax (with extra fish oil tablets to get 6/3 ration to 4/1).
I lost over 20 pounds both times. I made the whole foods version just as regimented as the v-diet. There was no variation and everything was measured. However I would tell people to do the v-diet as prescribed if you want the easier solution. Its less initial estimating to do and making the shakes is pretty easy. Lot of meat to eat if you go the whole foods route.
No idea if there is a health cost to such an extreme diet but I can tell you that the blood work results were impressive. On the shake version (which is when i made sure I got a pre and post diet lab test to satisfy my curiosity) my LDL dropped 75 points in 28 days. I genetically have high Cho and to have it drop that much made me a happy camper.