The idea was to allow fan-edits to be distributed legally as data files (".edit") containing no copyrighted material. Instead the files would have to be played on a computer using special player software which would play scenes from DVD in an order specified by the file.
The file format would be based on a zip archive.
The main file inside the archive would be a play list - a text file with ordered commands to the DVD player/s on what frames and audio tracks to play. A somewhat smart subsystem in the player would cache frames in memory (not break only on GOP boundaries). It would also cache entire sequences on the local harddrive so that users would not have to switch discs more than once.
The .edit-files would also be able to contain video sequences, but these should have to be encrypted with DVD data as decryption key (XOR algorithm = simple, superfast, yet totally secure).
Subtitles would have been stored as .srt-files. Menus would be HTML with the usual features of pictures, scripting and Flash. This would be OK for realtime playback on a computer.
There were two major problems:
1. The legal issue of breaking DVD copy protection. There are no 100% legal DVD players on Linux that I know of. There is no public DVD-API on MacOS. I don't know about Windows.
2. For realtime playback, the computer and DVD-playing subsystem has to be fast enough to decode two streams in realtime. If you circumvent DVD copy protection, do you still get hardware acceleration? Does hardware acceleration support multiple streams and cutting in the middle of a GOP?
Problem 1 still persists if you make a Live CD.