I am yet to see a player in Linux which can enable a video to be set as Desktop Wallpaper.
Similar functionalities exists in Windows with players like BSPlayer, Video - desktop etc.
So ... :)
Logged In: YES
MPlayer has the option -rootwin for that. Unfortunately it doesn't work, at least, in KDE:
Play movie in the root window (desktop background). Desktop
background images may cover the movie window, though. Only
works with the x11, xv, xmga, xvidix, quartz, macosx and directx
video output drivers.
Logged In: NO
Yes, this will be a cool feature also for the Windows users!
I tried in Windows and it doesn't work either.
So I'm afraid this can't be done (unless someone tells me the right options which makes this to work).