I had several DVD ISO images I wished to view on my Raspberry Pi. Raspbmc claims to support playing MPEG streams from such an image. However this is only possible on a local device; a file hosted on a network server is the exception. One solution is quite simple. Transcode the title to a format that is supported, in this case, H.264. A side-effect of this technique is that you can avoid the licensing fee for the Pi’s MPEG-2 hardware decoder. The MPEG-4 H.264 hardware decoder built-in to the Raspberry Pi is freely accessible.
The transcoder I chose to use is Handbrake. This includes many video filters which, if used correctly, can enhance and clean up the image.