Yes. We're trying hard to stay out of jail.
Then licence an MPEG2/DVD playback engine.
I am struck that J River is set up to sell plugins for additional features, but the stuff needed to enable DVD playback is ignored.
Pop up a message at install time if no DVD playback software is found saying "You don't appear to have DVD playback software installed - Would you like to purchase the super-duper MC12 optimized DVD pack for $10". Or... "You appear to have DVD playback software installed. It will probably work with MC12. If you want, you can buy some for $10 which will definitely work and will enable all special features."
MC12 would be set up to prefer the JR supplied MPEG2 decoder & DVD navigator (if present) over the DirectShow path. You could also build in support for ffdshow post-processing, like Theatertek does. (Probably already works in MC12 with the DirectShow chain support.)
Most suppliers of licensed MPEG2/DVD decoders can also supply fully licensed MPEG4 and H.264 codecs as well. Though once ffdshow is installed, these are present too...
Or you can refer users to an arms-length site where they can download the open source packs - somewhat like Inmatrix (Zoomplayer) does.