You can configure your system to automount ISO files. You need to install a program that can create a virtual optical drive and mount disc image files (e.g. Daemon Tools or Virtual CloneDrive).
You can import ISOs to MC as documents. As jmone said ISO files cannot be played directly inside MC, but they can be automounted on "play" and automatically played as regular DVD video discs.
In other words: when the system is properly configured you can select an ISO file inside MC and start playback. The ISO file will be opened with the associated external program (= the installed drive emulator) and automatically mounted as a DVD video disc. The autoplay system will detect the inserted DVD disc and playback in MC will start.
You can add file tags and also cover art to ISO files since MC's database can handle also various document file types.