Best How To :

The MediaPlayer and SurfaceView approach worked.

public class MyDreamService extends DreamService implements SurfaceHolder.Callback, MediaPlayer.OnPreparedListener {
    private MediaPlayer mediaPlayer;
    private SurfaceHolder vidHolder;
    private SurfaceView vidSurface;

    @Override
    public void onAttachedToWindow() {
        super.onAttachedToWindow();
        setInteractive(false);
        setFullscreen(true);
        setContentView(R.layout.activity_main);
        vidSurface = (SurfaceView) findViewById(R.id.surfView);
        vidHolder = vidSurface.getHolder();
        vidHolder.addCallback(this);
    }

    @Override
    public void onDreamingStarted() {
        super.onDreamingStarted();
    }

    @Override
    public void onDreamingStopped() {
        super.onDreamingStopped();
        if(mediaPlayer.isPlaying()) {
            mediaPlayer.stop();
        }
    }

    @Override
    public void onDetachedFromWindow() {
        super.onDetachedFromWindow();
    }

    @Override
    public void surfaceCreated(SurfaceHolder holder) {
        try {
            mediaPlayer = MediaPlayer.create(this, R.raw.voice_activated_corgi);
            mediaPlayer.setLooping(true);
            mediaPlayer.setDisplay(vidHolder);
            mediaPlayer.setOnPreparedListener(this);
            mediaPlayer.prepare();
        }
        catch(Exception e){
            e.printStackTrace();
        }
    }

    @Override
    public void surfaceChanged(SurfaceHolder holder, int format, int width, int height) {

    }

    @Override
    public void surfaceDestroyed(SurfaceHolder holder) {

    }

    @Override
    public void onPrepared(MediaPlayer mp) {
        mediaPlayer.start();
    }
}

and

<RelativeLayout xmlns:android="http://schemas.android.com/apk/res/android"
                xmlns:tools="http://schemas.android.com/tools"
                android:layout_width="match_parent"
                android:layout_height="match_parent"
                android:background="#000000"
                android:paddingBottom="@dimen/activity_vertical_margin"
                android:paddingLeft="@dimen/activity_horizontal_margin"
                android:paddingRight="@dimen/activity_horizontal_margin"
                android:paddingTop="@dimen/activity_vertical_margin" >

    <SurfaceView
        android:id="@+id/surfView"
        android:layout_width="fill_parent"
        android:layout_height="fill_parent" />

</RelativeLayout>

Based on the guide at

http://code.tutsplus.com/tutorials/streaming-video-in-android-apps--cms-19888

Note: I have a feeling I need to handle the onDreamStarted() and the onPrepared() in a bit smarter fashion. But it works as of now. But if I needed the MediaController, then that'd get a bit more difficult.