1. You can manage your library in DropBox or Box to your liking - just as you would with your other files/folders, i.e., by Author, Genre, etc. However, your files cannot appear on the carousel - they are simply files stored in another location and must be downloaded to the Fire in order to read.
2. I highly recommend DVD Catalyst - it is an all-in-one ripping/conversion program that has presets for the Fire and many other tablets. The developer is very responsive and answers questions/requests quickly. There is a trial version available:
DVD Catalyst 4