I talk alot about USB and DVD on my page, basicly - NO, you cant run DVD over USB, one or 2 companies say they make a product that will work, ( and will actualy read data from the DVD) but because of the transfer rates of USB they are unable to sustain the required transfer rate for DVD decoding.
If you dont mind it skiping, I guess it would be oktp use USB, but I would go with something like this :Its a pcmcia attached DVD drive,
http://www.psism.com/dvd800.htm
Why dont you upgrade the cpu in the trunk, and get an LCD - ditch the laptop , and make room for a passenger.
You could go with the dvd in the back with video out to the lap-top. For control :I use VNC software on my pc for upgrades and stuff, its free

you basicaly load this on the 2 pc's ( be sure to assign each one an ip address) one is a client the other is a server, and you basicaly take remot control on the rear pc from the laptop. It would not smooth enogh for watching video, but its fine to hit the play button.
http://www.uk.research.att.com/vnc/winvnc.html
also check out
http://www.visualdomain.net/
this guy has some great stuff to remote control dvd players
In my personal set-up, I have a slightly more powerfull CPU in the trunk, and I run everything ( mp3,tv, gps, DVD ) off of it. I use an ATI all in wonder pro to assist in dvd decoding, with an external SCSI attached DVD. ( ran it up under the drivers seat so I can change disks without crawling into the trunk.
[This message has been edited by gizmomkr (edited 01-24-2001).]