iMove (I think) handles MPEG-2 -- I don't have one to try
Correct me if I'm wrong, but won't iMovie handle MPEG-2 video? You can (technically can) watch video in iMovie's preview window, or use it (again, if it does support MPEG-2) to convert the video to another format, say QuickTime.
Now this may be something specific to iMovie '05 so it's probably not an option in the version that came with MacOS X (probably version 3, I don't know which version they're shipping on new Macs). So in that case, buying the QuickTime MPEG-2 Component would be the less expensive option if all you want is to play the files and not edit them.