Ok, well I didn't think this would work but I tried it and it does.
If you share your dvd drive on your computer XBMC is able to play the dvd files across the network as it would with any dvd folder.
It doesn't seem to have any streaming issues other than prompting to start from the same position as the previous disc when I swapped it for a new one.
Audio cd's won't work because they are not seen as standard data files but blu-ray discs might stream over ethernet? Maybe someone with a blu-ray drive in their computer could try since I don't have one.
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