I choose not to keep all my media files in iTunes, just as i choose not to let iPhoto dictate my filing arrangement for fotos. I keep my VIDEO_TS on an external drive with an alias in my home/movies folder, this allows Front Row to see it and it can be played with either VLC or DVD assist.
Never having downloaded one of the iTMS movies I don't know their formats, but am sure there is a simple way to place video_ts files in iTunes, they are just another flavor of mpeg