Yup, it’ll work fine. Here are 3 things to keep in mind:
1) Make sure the router and ethernet cards on both computers all support gigabit speeds. You can easily test this by dragging a multi-GB video file from one computer to the other. It should take arond 1 minute per GB to copy. If it’s taking more like 5-10 minutes per GB, you need to upgrade something.
2) I do this with DV video and it works fine. I’ve not yet tested it with any other formats, so I can’t promise you that other, larger formats will work well. (I can say that I’ve done multi-cam edits this way, running 3 DV streams at once, and that works too.)
3) This is all great for editing, but I wouldn’t trust any capturing or playback-to-tape using this method. Likewise, if you’re compressing for DVD you’ll be better off just moving the firewire drive to the computer that you want to do the compressing on.