Is watching DVD's / Blu-Ray's detrimental to the life of my game console?

My DVD player died a while back and I've been using my XBox 360 in its stead.

Am I killing my XBox by doing so?

Is it a big deal?

No, you are not. At least, not in the sense that it will die sooner than it becomes obsolete.

Playing Xbox games taxes the internals of the machine in exactly the same way as watching a DVD.

That is, Xbox games come packed with almost as much data as a full DVD, and they try to load data as fast as possible from disk. DVDs, however, only need to read from the disk at the bitrate of the movie. (~2000kbps)

Will using it as a video player make the hardware die faster? Yes - because you're using it more than you would otherwise. However, using the console as a video player is no more detrimental to it than using it for playing games.