This might be useful to you in relation to the question 2.5) that you asked about using your PC to store your DVD's - I take it you mean over a network.
If you share your "Movies" folder on Windows (which contains your stored DVD's in video_ts format), then mount it on OS X, you can then use the same technique you use on a native mac directory to get DVD Assist to work. For more about PC to Mac sharing type joelshoemaker into google and look at the 2nd result down (I'm not allowed to link just yet
So, for example, you can put a Quicktime movie of your artwork in your video_ts folder on your PC, then put an alias to it in your "Movies" folder on your Mac. The Mac will then see this alias in Frontrow, providing the PC folder is mounted, and you should then be able to play the movie using DVD Assist.
The only difference with this method, to the Mac method, is that I was unable to remove the ".mov" filetype on the PC folder. If I did, the file would become an unknown file type and if I linked to it in my "Movies" folder on my Mac it would not show up in Frontrow. Perhaps someone knows a workaround or solution for this?
I've tried this PC to Mac DVD sharing on my own setup and it works fine on a 10Mb home network. You might have difficulties if you're using wireless. On my wireless setup I have difficulties playing Video_TS movies smoothly from PC to Mac. That's on a G network, with Mimo, and my PC and Mac only a metre away. On Mac to Mac sharing though, even at longer distances, I have no problems with stuttering video. So it might depend on your PC setup then.
As for creating .mov files on your PC, again, I'd think that you'd have to use Quicktime Pro for Windows.