If you opened up the Iso, Extracted the files, Removed the movies and then repacked the ISO do you think the X-box might complain a little that the files were missing?
I think that the XBE's will probably need to be edited so that all references to movie filenames point to one small movie thats left on the disk. Either that or Down Sample the movies (Assuming they are in a known format or tools are deveolped to do so).
Another possability would be to get the smallest movie from ANY game in the correct format and make muliple copies of it, renaming them as you went to make the movie appear that it is present (this assumes there is room on the CD).
Oh and whilst we are at it does anyone happen to know if the X-box accesses any of the files on the disk using LBA addressing or is it just using the disks TOC and filnames?
If the Xbox IS capable of LBA addressing I expect that its only a matter of time before programmers start implementing internal LBA tables into the code so that the files have to appear at set places on the disk. This makes it a REAL pain to rip stuff.
Still at least there are no known media checks at present (check for DVD game on CD) as otherwise you would have to patch them too ;(