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.
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.
> 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.