MPEG2 ?
Welcome to 2010, people now use MP4 and I doubt it runs on your machine... even with frameskiping and no sound.
I also doubt your machine can cope with DVD decoding (and I'm not even talking about bluray, which is standard...).
It's no crap. These machines are very limited...
Why on earth would anyone even want to play a Bluray on an A1200?
Seriously, geeks like you who wet themselves at shiny new toys (As opposed to nerds who actually know what they are talking about and enjoy making stuff do what it wasn't designed to do just because we can) really don't get it at all.
If I wanted to play a Bluray (Which I don't, as I have more creative things to do with my time than waste it watching ) then I'd buy a Bluray player and a TV.
If I want to make hardware from 20yrs ago do things the engineers never imagined (Which I do, see "creative things" above) then I'll carry do what I'm doing with C64's, Amiga's and other eclectic pieces of hardware that are probably older than you.