You're in luck! You can indeed set up your two computers to each share the other person's iTunes library, including music, podcasts, movies, and anything else you've dragged in (well, with the exception of apps. It appears that you can't share apps, sorry!)

Better yet, it's pretty darn easy to accomplish.

I'll show you one server --> client setup, then you can reverse it and each will see the other's music, etc.

Launch iTunes, then go to iTunes --> Preferences. It'll show you a window with a lot of different preferences you can set. Click on "Sharing" along the top, then here's what you'll see:

You can probably guess what to do, but I'll say it anyway. Click on "Share my library on my local network" then click "OK".

Now the official Apple "don't be a bad guy" warning window pops up:

So don't set this up as the official music server for the entire dorm building, okay? Assuming you don't do so, click on "OK" and that's all you need to do. It'll be a server from that point on.

On the client side, when you look on the left side menu in iTunes, you'll see the server show up, with contents neatly categorized:

You'll see that it lets you access everything you want from your roommate's computer, including movies (as I'm showing here). Now set it up in reverse and you can access each other's music any time you want. Enjoy!