This may not be exactly what you are looking for, but if you convert your InDesign layout to HTML5 web-app with eDocker Tablet Publisher, you may add MP4 videos into it.

Readers need just default iPad Safari for reading your publication (and watching videos)

http://www.edocker.fi/index.php/en/products/edocker-tablet-publisher/

But. I did just find an app called EZpdf reader that plays video! A google search of the phrase "play video in pdf on iPad" brought up an App Store entry for that gem, and it actually works! Much better to bundle a $3 app with the book, or discount the price accordingly, than to lay out $399 per publication without knowing if we'll ever recoup the costs on a first venture - or a tenth! I may well email them to see what we can do about postering if the options are as limited as they seem on first test.

Not on the iBooks store. And I suppose they won't let me bundle the app on our server. You're right - pricing adjustment if it's their first purchase may be the way to go.

Goes without saying - nothing will kill an already-minuscule market faster than a product that doesn't deliver on its main feature. But we will start by specifying iPad only to start - I don't see this audience as a heavy Android community anyway - it's mature women. They may be Windows computer users, but my experience is that their phones are iOS, and their tablets tend to be iPads. (Even if their husbands are practically holding up silver crosses on chains on the way in and out of the Apple store . . .)

I created an interactive PDF with mp4 video (using IDCS5) that doesn't display on any Apple device - including Mac computers.  Works just fine on PC.  Any suggestions?  Is it as simple as a reader problem in that case as well?  When sending out a sales pitch, it seems kind of ridiculous to have to demand the potential client to upgrade their Reader version before watching the content.

Thanks for the help!

That's true. However, if the PDF is being used by an internal group--let's say a sales force--a company could invest in this reader. Obviously that decision would be driven by how many iPads the PDF would run on, how often they use this format, etc.

DPS looks great, but most designers I've talked to are reluctant to use it because of the cost. Even though the single issue option is available, there seems to be confusion about how that works. Can you use it for a one-off publication (vs. a monthly publication), paying the fee once but have unlimited downloads? And is it only distributed through the Apple Store or by logging into Acrobat.com?

Thanks Bob, that's good to know!