I tried really hard to convince my parents to buy a small HTPC instead of the streamer. It's really A LOT better. after you add the cost of the higher end Dune or the popcorn a400, which is what you'll probably want to get, and then get a HDD for it you are looking at the same price for a high quality HTPC which can then act as a media server for the rest of your house and other devices like ipads and laptops, even to other homes or devices on the internet anywhere in the world.
I'm pretty sure the highest end Dune does blu-ray no problem as it has a built in blu ray drive. Can't say about ISO, should say on their site, but they seem to play pretty much everything besides a few rare files.
if you have a really big TV and sit close enough to it you can sit right on the couch with a nice keyboard/mouse combo, and browse the web and also control the media. For the simpler folk they are left with apps that are fairly basic and easy to learn and work well controlling the software.
You can set both XBMC and Jriver to start up upon booting so all they'll ever see is a nice 10' interface saying something like MOVIES TV MUSIC.
the coolness factor is also way higher with the HTPC.
my wife is able to control XBMC and Jriver easily and she's not a huge fan of messing around with software!
My parents with their Dune, well, my dad who's pretty good with computers can handle the Dune, but he can't manage the software side of things...I have to do all that when I visit.
but I don't think my mother touches it. It's simply too daunting of a task to figure out how to turn everything on let alone control it. Dune has an app for the iphone and ipad that is basically the same as the remote and it works fine.
Now that I see My Movies can work with the Dune I think there's a better chance the Dune will work out for them. I hope to install that this weekend and see how it goes.