Your input can't be opened: VLC is unable to open the MRL 'rtsp://192.168.1.54'. The Pi-side seems to be ok - no errors and seems to reacting to the connected client?
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given i see the video streaming from pi camera on a screen connected to the pi but not through VLC installed on my windows 10 pc.
While this is a quick and easy setup, the software is far from optimized, so while its low latency (no such thing as zero latency), the interface is very chatty, and uses some extra CPU cycles.
If you're needing (because of power/size constraint) a Zero to do this, your SOL.
Thus, i deem, nothing gets repacked or restreamed, remuxed or what so ever.
Was hoping someone could point me in the right direction.
The solution suggested by Diego is good except that it's pretty slow and has a huge video delay since the vlc there re-streams a stream of the raspvid.
Other options are possible too, like MJPEG over http.