yes the LOR 1602W's will work via DMX input, however you do lose the hardware's capability of shimmer and twinkle which is built into the LOR protocol.
Not sure about this, but do the PC series of LOR controllers support DMX input as well, for some reason I thought that they didnt.
I think Andrew was suggesting that you could drive your LOR controllers via the LOR protocol and allow a LOR plugin to drive ethernet into a DR4 and output LOR prococol on the DR$'s interfaces instead of DMX.