1) What kernel version will the libdvdcss work with? Does it need anything else to work?
I've witnessed libdvdcss working on 2.4 and 2.6 kernels. Its easy to implement, all you need to do is:
i) Locate either a libdvdcss*.rpm file (for Fedora, Suse or similar), or libdvdcss*.deb file (for Debian, Ubuntu, or similar) on the internet and download it.
ii) If you have the rpm version and you are running Fedora, Suse or similar, enter into a terminal: rpm -Uvh libdvdcss*.rpm
ii) If you have the deb version and you are running Debian, Ubuntu or similar, enter into a terminal: sudo dpkg -i libdvdcss*.deb
And thats pretty much it, you should be good to go with DVD playback in your preferred video playback application such as Xine, Totem, VLC etc.
Please note that the * means that the filename example I have presented here is not complete, as there are usually version numbers in the file name, and this will depend upon which version you manage to download from the net.
Using libdvdcss is essentially illegal I believe, so you might have to search deep in order to find this library. When you do locate a working copy of it, I suggest you keep it in a safe place in case you want to install it again sometime later in the future.
If you can only find an rpm version of it, you can still probably get the rpm to work on a Debian or Ubuntu based system by using a program called 'alien'.
Getting alien on Debian or Ubuntu is easy, all you need to type into a terminal is: sudo apt-get install alien.
Once alien is installed, you can use alien to convert the 'rpm' file into a 'deb' file by typing into a terminal:alien <packagename>.rpm
Then once you have the deb file, you can type into a terminal:sudo dpkg -i <packagename>.deb
and that will install the package for you.