SD card adapter only works with the Photos app.
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I would recommend reencoding in Handbrake into m4v files. Then when you store them you should be able to import them into your camera roll for playback.
edit: also, with it properly encoded into h.264 via Handbrake, your video files will play natively through the hardware decoders and you'll get better quality and better battery life. Transcodin on the fly has got to reak havoc on CPU and batt. life.