I tried it and it works for most of the games. Instead of extracting the ISOs, I'm using xbfuse to mount the ISOs directly and share the mount point on my linux server. I tried the games I have. Besides the slightly slow loading problem, they work great except one: Prince Of Persia.
Every time I load this game, I got "Exception intercepted", which I believe coming from the dashlaunch. Not sure if this is a dashlaunch problem, or fsd problem, or the game itself.