As far as I am aware, if they are not distributing their changes, there is no copyright violation.
I'd be interested to see what laws they are violating.
> A few people I know just check out movie from the local Library on DVD or Bluray, rip them and then watch them from Plex, [and then return the DVD or Bluray without deleting the ripped copy].
This is textbook piracy.
A person who copies a specific work and does not distribute it is not breaking the law as far as I am aware.
That is why I'd be interested in seeing what laws have been broken.
If they watch the movie again without a license then it would be copyright infringement.
Assuming they live in a jurisdiction that allows format shifting they've not made a copy without a license or right to do so.
It is the copying that is the tort. Distribution is a separate tort/crime.
You don't mention your jurisdiction but this is common to international law and applies in almost all countries.