I tried but it won't run my WD 640g 2.5" external drive; it powers it but no spinning. Probably can't output the power required.
To set the Pendo up, go to Settings and in USB Mode Select, set the Host Mode to On (ticked). It allows you to connect Mouse, keyboard etc. I believe that you have to be out of Host mode to use Dodo external modem. Also, when not in Host mode, you can access the SD card directly from Windows Explorer.
Drop some VOBs onto it and see if it'll play them; it definitely plays H264 MP4s so in the worst case just convert your DVDs to 600kb/sec MP4s (about 300mb per movie). You'll get a few on a 8gb card (that's what mine is); it may take bigger.