The app "wondershare player" by "Wondershare Software Co., Ltd." sounds like it is pretty close to what you're trying to achieve.
It cannot play ISO or IMG files straight up, but can play the exploded directory structures (AUDIO_TS + VIDEO_TS). So instead of copying the ISO itself, just copy the contents into a subdir. The subdir name will then show up as a sort of disc-image in the player.
The player comes with DVD menu navigation, subtitle and audio selections etc. All in all, it looks like a full fledged DVD player. I've got no idea how it works regarding h/w acceleration, power consumption etc. The interface is a bit clumsy, but fully usable.
The app is free, and I'm not in any way affiliated with the app or company behind it, so don't blame me if it turns out to be an elaborate scam delivery system