John, you're correct, the Alpine unit only permits watching videos on the dashboard screen while the parking brake is applied. Also, you can't access the menus for DVD settings and detailed frequency response while moving. I can run the iPod via the touchscreen, and and most everything else, while driving. Interestingly, I can also leave the rearview camera on continuously, it's not limited to just reverse gear.
All of the Multimedia HUs that I researched have this video restriction, although it should be possible to overcome with some creative re-wiring, especially if you do your own install. Remember, of course, that it's designed that way for safety.
Just_Visiting, good luck with your plans. I've not done any research on speaker sizes. Be sure to give us a post on what you find out.