Yes, you should be able to play the main movie in VLC once the ISO is mounted. The ISO will look like a disc in a physical drive to the program.
But the main purpose of putting your movies in the computer as ISO files is to access all the material on the original discs. None of the free players have the ability to use blu ray menus, so it is difficult to play extras. It is possible to go to the Streams folder and play individual m2ts files from there, but you won't have many clues as to which one to select. Thumbnails will help there.
To have easy menu access you need a commercial player, like Arcsoft TMT 5 or PowerDVD. There are a couple of others, Corel WinDVD and Nero's player come to mind, though I think you have to have the full media suite from Nero. DVDFab also has a player, though I don't think it is as good.
TMT 5 is probably the best, though not cheap. You can find discount coupons for the program most of the time.