MUSIC IN-GAME!
Forgive me for writing such a long post, but since it is my first I hope you'll excuse the length.
I, also, tried to get music to play in-game (without resorting to a physical CD), with no success. However, I remembered an old trick I had done for other "old" PC games that use CD audio, and sure enough it worked! I thought you all might be interested to know.
First, you need to make sure you have a full image of the original CD, which includes the CD audio. You can tell by mounting the image and then using Winamp (or Windows Media Player) to play the mounted CD. If it only shows one big track (the "data track"), then it's not a full image. If it shows 16 tracks (the big "data track" followed by 15 songs) then you've got a full image. Most ".ISO" images will not be a full image, but BIN/CUE (or in my case MDS/MDF) will more likely be. Oh, and when you're testing don't play the "data track" for too long, it gets really hard on the ears.

Once you have a full image, mount it with Daemon Tools *as the lowest lettered optical (CD/DVD) drive on your system*. You will probably have to change the drive letter on your actual physical CD drive to a higher letter first. (Which you can do through right-click My Computer -> Manage -> Disk Management -> right-click on your CD drive -> Change Drive Letter and Paths...) Note that you may have to change it back when you're done, if you have programs/games that depend on accessing their CD data at that letter.
The reason you have to have your virtual CD drive (the mounted image) as the lowest letter of your CD drives, is because the game will only play CD audio from the first one. I've had other games with this same issue, where if you played the game from a secondary CD drive (with a higher letter) then the CD audio would not play. Likewise, if your virtual CD drive has a higher letter (which by default I think everyone does) than your physical CD drive, then the CD audio won't play in-game. Just make sure the virtual one is the lowest letter (of your optical drives), and it will work great. (You can make the letters whatever you want, it doesn't have to be D: or E: or anything in particular. Just the order matters.)
For example, on my laptop, I had two hard drive partitions (C: and D:), a CD/DVD drive (E:), and my virtual drive (J:). I simply changed the CD/DVD drive to H:, and the virtual drive to G: (a letter before H), and all of a sudden the music plays!

Be forewarned that it uses Window's "CD Player" volume level (and ignores the in-game Music volume setting). I had to quick ALT-TAB back to Windows to turn it way down (after it blasted my ears).
So, yes, you can hear the in-game music like normal, without having the physical Battlezone CD. Just make sure that
1) you have a full image that includes the CD audio, and
2) your virtual drive's letter comes before any other CD/DVD drive letter.
(You don't have to install anything using the image, just mount it and let it sit there while you play the game.)
Disclaimer: there may be other idiosyncrasies that affect your individual situation, but by and large this should do it. Oh, and for the record, my image has a Volume Label of "BZONE", which may or may not have any bearing on anything. Also for the record, I installed the game using Battlezone 1998 v1.1 installer, with all options selected (except Daemon Tools, since I already had the newest version), though I doubt that makes any difference either.
Enjoy!
Edit: Btw, the full image I'm using came from a post on another website. If anyone wants the link to that post, I can PM it to them.