Not yet but perhaps in the future. Good read here...
Understanding the Target Audience for iPad
"If you still aren’t sold on the Apple iPad think about having a 9.7-inch web connected touchscreen display in your car with the power of a navigation head unit and dvd player. It’s an affordable carputer with multitouch, a high resolution display with amazing viewing angles and it support HD video playback. With a wiring kit to run the iPad into your car speakers, a mounting kit and a FM radio app leads me to believe there’s a bright future for iPad car installers."
There is no way to connect a DVD player. The iPad has no "Video input" as far as I know. iTunes also does not support syncing/ripping DVDs like an audio CD. You can buy or rent movies through iTunes from Apple though.
Another alternative would be Netflix which allows you to watch videos on demand though their App.
Many DVDs these days come with a free digital copy that you can download or activate and then sync it to your iPad.
There are other legal alternatives, but Apple does not like them to be mentioned here so your favorite search engine will have to answer that.
Disclaimer: We're the developers.
Yes, there is an alternative solution, where you use the DVD drives on any Mac or PC, and stream the content using wifi to the iPad. It's live with no waiting time and works exactly (or close to) an external DVD drive.
We're still having some problems with complicated DVD menus and extras, but all features such as chapter, subtitles, audio and language selection work beautifully...
iTunes link: http://itunes.apple.com/us/app/dvd-player-for-ipad/id376493632?mt=8
There is no way to hook up an external DVD drive to iPad, however, iPad can play 720p or 1080p videos, so you can convert your DVD movies to H.264 .mp4 videos first, then sync the output videos to your iPad with iTunes.
To convert DVD to iPad supported videos, you can use the open-source media converter Handbrake. It’s free, it’s enough if your DVDs are not copy-protected. If your DVDs are copy-protected, you may have to use a third-party tool.
The tutorial may be helpful: