AirPlay isn't the most efficient way to do these things.
Video player, on your computer, decodes and plays back video file -> AirPlay encodes your entire screen and sends it over WiFi -> Apple TV decodes AirPlay stream.
Whereas with VLC or Plex,
Computer streams video file over WiFi -> Video player, on Apple TV, decodes and plays the video file.
So instead of decode/encode/decode, you just have decode.
Sort of. It really depends on the app and content. AirPlay will work in two modes. One is that the video is decoded on the device and every pixel sent across the wire to the screen, as you describe. This is really intended more for things like games and other on-device-generated content, not streaming services. In fact, if a streaming service does this officially it is "doing it wrong". But, it also does allow one to stream from services which don't really support AirPlay (at least from a Mac; from iOS if the app doesn't support AirPlay you are just out of luck).
However, AirPlay also has a mode (commonly used by services like Amazon, Netflix, etc, which support AirPlay from iOS devices) where what is sent across are credentials and a URL, then the Apple TV simply streams from that URL with those credentials while listening for playback controls coming from the iOS device.
People think that Chromecast came out with this second mode. They are incorrect. AirPlay has included and pushed it for streaming video since it was introduced (what Chromecast does differently is allow any device to connect and send playback controls, so if the device sending playback controls leaves the building playback just keeps going).
[doublepost=1452624399][/doublepost]
Unless they have a digital copy included, I think the process of ripping them is a DRM violation even if you bought them. For the record, it's a silly law and needs to be changed. You should be able to rip your purchased items, if for nothing else, to make a backup of the media which is fragile.
Yes, it is a DMCA violation to rip Bluray disks (circumventing copy protections). That's not nearly the same level of violation as torrenting the files (which involves both downloading content you don't have any license to view as well as publishing that content to others who don't necessarily have a license to view it).
A fairly good analog is comparing speeding (a common crime, although unlike speeding ripping a Bluray has no potential for actual damages) to breaking into a racetrack to drive around. There are different degrees of crime in life, and for the most part living within ethical boundaries (ensuring that the person who owns the content is fairly compensated for you viewing it is a big one) is more important than living within the letter of a particularly poorly-concieved law. IMHO, of course.
In any case, yeah, unless you're using Plex and VLC
only to watch your own home movies or video content which has been licensed to the public domain, there is some violation of something going on there. Just don't lump that in with torrenting unpaid-for content.