I would like to know if there is any device on the market for up to $US 1000
to which I can connect a standard composite video signal (such as the output
from a VCR or video camera) and the video output from a computer (at least
1024x768 @ 60 Hz) which will combine these signals creating a picture-in-picture
display which can be viewed on a standard computer monitor.  I am aware there
are a number of devices which will let one watch TV in a small window on their
computer screen, but I also want the option of placing the computer output in
the small inset window while the video signal is full screen behind it.  This
means the device would need to shrink the high resolution computer output while
expanding the lower resolution video signal.  I would also like some flexibility
in positioning and sizing the inset window.  The device could be an external
unit or something that goes into a computer.  If the latter, it should work
under linux.

:-) Why not video out to a PIP TV? :) You get the best of both worlds.

You can use any composite or S-Video capable video-out card, OR you
can use a scan converter to change vga to RCA or SVideo from the
computer.

Just a thought. It's easier and cheaper than you might think. If you
PIP the monitor signal, it doesn't really matter the resolution
quality. You can also swap (back/inset) on the fly. I figure, you can
get a scan convert http://store.pilipinosuperstore.com/444-7300.html
for about $120 and a PIP TV for, well, you determine your size.

I want higher resolution than a TV offers.  There is a PIP
computer monitor that mostly does what I want, the Samsung 173MW
http://www.samsung.ca/cgi-bin/nasecabc/en/b2c/product/product_detail.jsp?LoginFlag=NO&prod_id=MM17NSSS&prod_path=%2fConsumer+Products%2fComputers+%26+Related+Products%2fMonitor%2fLCD+-+Multi-function
but I hope to separate the PIP function from the display and get
a cheaper (by using a monitor I already have) and more flexible
(more PIP size/placement options) solution.
Thanks for your comment.

I did base my comment on your initial question:
-=-=-=-
I also want the option of placing the computer output in
the small inset window while the video signal is full screen behind it.  This
means the device would need to shrink the high resolution computer output while
expanding the lower resolution video signal.
-=-=-=-
Which did lead me to believe that the comment I gave fit the
parameters, and the converter I quoted did handle 1280x1024, even if
the tv/monitor doesn't exactly fit the bill. But, let's continue on
the vein with what I suggested.

The following monitor, N1700W (about $800)
http://www.viewsonic.com/products/tventertainment/lcdtv/n1700w/index.htm
http://www.jr.com/JRProductPage.process?Merchant_Id=1&Product_code=VIW%20N1700W&showcase=t&JRSource=channel.viewsonic.05-2417214

But you said this:

but I hope to separate the PIP function from the display and get
a cheaper (by using a monitor I already have) and more flexible
(more PIP size/placement options) solution.
-=-=-
Even though you had specified a range less than $1000. 

I'm not sure many will be able to help you find a Linux software
solution for that, as, even if you could find a pip for TV signal for
Linux software, your window manager's Root desktop will still occupy
the full monitor. (although you *might* be able to find something that
puts video on the root desktop, but icons will/might overlay it..) I
think it would take a rewrite of Xwindows to swap the window manager's
display with the inset. However, you might be able to VNC view another
computer running video full screen, although I'm pretty sure that's
not acceptable, either.

I understand your comment, however. It's hard enough getting Linux
drivers for some video cards, let alone multiple signal handling...

Perhaps I should have mentioned that the PIP monitor solution had occured to me,
though I did ask for a "device" whose output would go to "a standard computer
monitor."
Actually, getting a video signal into the X windows root window would be just
the thing.  I don't actually need a whole linux desktop in the inset window,
just the window from one program.  (I can easily shut down or configure the
window manager so it's not in the way.)  Swapping them, i.e. having the video
in the inset window, is not as important, but one of the "TV watching"
solutions I referred to in my original question could be used if necessary.
Maybe I'll ask a different question.  Thanks for getting me thinking again!

I'm currently looking into "video for linux"
http://www.exploits.org/v4l/
for information on capturing a video signal and displaying live to the root
window.
I not sure I need an answer to my original question anymore so I've lowered
the price to $2.  I would just remove the question but I want to keep the
comments around a little while.  Hopefully this is not considered improper use
of this site.

I'm glad you hadn't taken offense at my comments, and as I think about
it, root window video, if possible, does indeed sound like what you
want :)