A DVD drive will work fine in Windows 95.
Will it play DVD movies though? That is another story.
Many Windows 95 computers do not have the speed or resources to actually play a DVD movie smoothly. You need software to playback DVDs and I bet most DVD software that comes bundled with drives these (WinDVD, Power DVD etc...) days have system requirements which are just too steep for 1995-1997 era machines... And these softwares may not even install on Windows 95, let alone run.
So in short, you can install and use a DVD drive just fine. But your DVD movies may not work the way you expect them, if at all.