If I remember correctly, the raid against Megamixx was driven by complaints from the distributors and major retailers (like Astro). The VRB was a very different animal from the current OMB. Local representatives from the major studios (translation: people from Magna, Viva, and Warner) actually sat on its board in an advisory capacity. Did this influence the way that the VRB conducted its anti-piracy activities? Sure it did! I've always believed that the ridiculous notion of unlicensed, original Region 1 releases being legally perceived as no better than pirated DVDs was an unfortunate side effect of this pro-studio arrangement. So Megamixx, essentially, was selling unlicensed, pirated goods. Go figure.
Regarding the WTO, yes, I believe regioning is discriminatory. That's never been brought to court though. Going up against the studios is a very expensive endeavor, and no consumer organization has the kind of deep pockets and political influence that these guys have. And with the limited shelf life now of DVD because of the entries of HD-DVD and BRD, it doesn't look like regioning in its current form will ever be challenged.