i would like to block out all movies rated r ...is that possible

Can any system "block out all movies rated r"? I don't think so.

Having an internet connection, one can get movies from all sorts of places. Even not connected to the internet, one could copy movies from another computer or device...

You could block, say, the Movies category using OpenDNS, but if you do not have administrative control of the ipod, the teen can choose a different DNS service (like your ISP's), use proxies, leave your network for another, etc. These devices are not made to be controlled, much less so than desktop/laptop computers with even home versions of operating systems.

Now, having a router on which you can set firewall rules will allow one to force anyone inside your network to the DNS server of your choice, but that won't stop anyone from doing what the want outside your network. I suggest people start looking for parental controls applications for the roaming devices they allow their children to own if they hope to control usage. For Apple products, the Apple App Store would be the place to look.