hmmmm

you might could do it, listen here. a dvd plays back at around 6-12mega bytes per second. a network (100mbps) can transfer files at the VERY most (theroretically) 12.5mega bytes per second. that is with switching, no data collision, perfect harmony. but in real life, most people get 1-8mega bytes per second (i get 1 on a 100mbps network, most my friends get 6-7). and a dvd mostly plays at 8 to 9 mbps with fighting sceens 12mbps (you get the idea).
so with that knowledge, you are going to be screwed with anything except the documentary of an inch worm. but lets go on
you could setup a computer to have a "trojan" so you can actually see the screen of the computer that is playing the dvd, which this idea is kinda stupid anyways because the playback would suck.
you could make your own software to send dvd playback in udp packets so you could get the needed speed (you have to turn full duplex off in your program)
i haven't played around with any of these ideas because i don't have dvd and they are not reasonable.
also, (tending to this subject), you cannot share a cdrom drive and play multiple games of that cd (that is being shared) over the network, so, that kinda shows that your sharing isn't going to work and encryption isn't a problem at this step.
sorry to bust your dreams

hope i shed some light on the matter