[TheJack]

Well, I found this http://www.powervr.org.uk/faq/faq.htm

What Overlay modes does KYRO I/II support?

Overlay is defined as displaying a streaming video from an external source, such as a live video feed or a VCR, directly to the screen in real time. This live video stream can, for example, be created by a hardware DVD decoder or by a Video Capture Card. To reduce CPU overhead and bus usage, the video is passed directly to the graphics card and piped directly to the screen, thus overlaying the video on top of the current Windows desktop.



The overlay input for KYRO I and II is limited to a width of 756 pixels. There are different types of overlay; most common are the 420 and 422 formats, which are both fully hardware accelerated by the KYRO Hardware. RGB overlays are not supported. Updated versions of Codecs (software in control of the overlay) should support multiple output formats, older versions might only support the RGB overlay type. If a movie player fails you might have to change some options/preferences through your application or overlay hardware control panel. If you cannot find a working setting you need to update your Codec to a version that supports the 420 or 422 format.

I guess I'll try the new generic powervr drivers (2.00), which I noticed arrived a short time ago (I'm using drivers from Hercules now). Maybe it'll help.