MCE will read and play your .ts files and .vob files without alteration, regardless of their size and compression.
You'll need to add a little widget in the MCE registry by doing a registry hack. Don't worry, it's easier than it sounds. Do a google search for "my dvds" and "MCE" and you should get a decent "how to" guide. Basically, it involves setting up an extra place holder on the MCE menu to link to a folder or set of folders that MCE monitors to movie type files. The movies should also be in the "top" level folder. You can add artwork to the folders so that it looks like your cd cover scroll.
