I just want to add my 2 cents. But first let me thank all the folks who has let the way. Kudos to hacked2123 and streetr8cer13. But I did like street's approach, keep it simple rule if possible.
My story is similar after getting past a few obstacles like the file size issue and ntfs issue.
1. Dumped blu-ray movie on PS3 and a USB mounted 500GB harddrive as NTFS filesystem.
2. Moved USB drive back to PS3 with a 23GB iso image of MI-3.
3. Mounted the iso image with a vitual DVD.
4. Used AnyDVHD to rip the movie. Created decrypted .m2ts files (no keys or anything), took about 40mins.
5. Nero 7 and Windows Media Player 10 both played the main movie .m2ts file, about 22GB. WMP had a pop up, but played the file with no problem.
6. Used vmc 1.0.8beta as a media server and PS3 was able to browse the PC to get a smaller .m2ts file and it downloaded to the PS3's HD and played the MI-3 intro in all it's GLORY!!!
So this stuff works!
7. I did stream a test sample video clip (NOT a .m2ts file) from my XP to the PS3 and it worked rather well using pimpstreamer worked better than tversity, which kept getting out of memory even using their flashlib fix.
I don't want to stream from the XP to the PS3 if I can help it, but I do want a way to use a large capacity USB drive with my ripped movies and play them on the PS3. Has anyone tackled this issue yet? I guess on way would be to format my 500GB USB drive as FAT32 and then use the splitter method for <4GB parts. Anyone have a better way yet?