The answer is absolutely Yes.
In the beginning I didn't bother with DVD ISO's. Later, however, I experimented with the possibility of using them and I have not looked back.
Most of my collection is now stored as ISO files. For playback I can right-click any ISO and choose 'Open with' VLC, or just double click the file to launch my burn software.
If your ISO images are larger than 4GB you will need a file system that will accomodate them, like NTFS.
Give it a try. -- C.