This one is so simple it is stupid ... but this didn't work in OS 10.3 and should have. They finally fixed it in Tiger
Drag and drop a VIDEO_TS folder onto the DVD Player application to open it. This is quicker than opening DVD Player and choosing "Open VIDEO_TS folder" from the file menu.
Mac OS X Hints
http://hints.macworld.com/article.php?story=20050521003141665