But it needs direct USB connection, as wireless is too weak for streaming ISO. The bandwidth is not there. I'd need wired gigabit for that -- especially for Blu-ray ISO -- and the WD TV Live doesn't have that.
I started playing with XBMC and am now a big fan. I believe that while it can't play full Blu-Ray menus, it can still play the video files inside with the help of AnyDVD HD, which I would recommend anyone trying to back discs up.