It could be useful in a 486 or slow Pentium for watching Video CDs. On a fast Pentium (tested with a 200 MHz Pentium) a software MPEG decoder like XingMPEG Player or a DirectShow filter (like the one that come with Windows Media Player 6.x) will be enough.
As rasz has written, it uses an MCI driver, which is a very "high level" framework for multimedia control and dates back to Windows 3.0. Most players use DirectShow to play videos, and I don't know of any DirectShow filter that would make use of this hardware.
I also wouldn't expect ReelMagic compatiblity. I think ReelMagic Windows apps would specifically look for the ReelMagic MCI driver and DOS games would look for a ReelMagic compatible device.