Blu-ray ISO's are the way to go.

I recently built a new PC for general use. It's the first Blu-ray capable PC I've ever owned, and man, is it sweet. I have a PlayStation 3 already, and since I enjoy the HD movie experience so much, I thought I'd try my hand at ripping a Blu-ray movie. My goal is to preserve the entire disc in full quality via the .iso format, just as I'm accustomed to doing with DVDs. This is very easy to do with AnyDVD HD. It's basically a 2-click solution. The question remains though: how does one playback a Blu-ray .iso file? PowerDVD 9 Ultra, the king of software Blu-ray playback, won't touch it. Nor will VLC. Enter a freeware solution: Virtual CloneDrive. Brought to you by SlySoft, the makers of AnyDVD. This software allows one to mount a virtual optical drive from any .iso file, including Blu-ray rips. Awesome. PowerDVD plays very nicely with a virtual drive. So there you go. But can you stream it? Don't know. Haven't tried. I actually don't have the means to test that one out at the moment. Stay tuned.