There have been several threads recently about video signal generation using AVRs. Circuit Cellar Issue 161, December '03, has the following article:
Generate Video Using Software Thread Integration
Video generation made simple. Intrigued? Read on to learn how a research group at North Carolina State University used an ATmega128 micro to generate a monochrome NTSC video signal with software thread integration. The end result is a 240 × 256 frame buffer based
display that renders lines, circles, sprites, and text.