The legislation in question is the DADVSI law, a french transcription of the EUCD (European Union Copyright Directive) text, which itself comes from the American DMCA (Digital Millenium Copyright Act). You didn't think it could get much worse than the DMCA, did you? You were wrong. Not only would this legislation outlaw devlopment and distribution of VideoLAN, but if you are caught using any non-sanctioned DVD player (for example, any DVD player on Linux), you can go to jail for 3 years. The law will also outlaw ripping MP3s from CD and such practices as lending music to a friend.
I suppose that if we haven't yet been successful in exporting full democracy to places like Iraq, at least we can take some solace in the fact that our oppressive copyright laws seem to spread like wildfire.