There are a couple really good video rendering packages for WPF. This guy Jeremiah Morrill has a blog where he discusses his numerous render projects. There's the WPF Win32 render project, and a number of low-level techniques he documents for how to access accelerated playback, Media Foundation .NET, DVD controls, etc... I believe his blog is titled "Jer's One Stop Shop".
Reading over his blog in general is a good idea if you are in to video/WPF. Last I checked, "MediaKit", one of his more comprehensive projects, enables easy use of DirectShow (simple xaml and your off and running, so don't worry) and other well known native interfaces. It's very robust and actively maintained, if not that specific project, check into some of the recent API's he's contributing on, some various Win7 media support also.
The only reason I'd bring up this other project, Augmented Reality, is that you remarked about adding content "on top". You should definitely check out wpfAugRel if your doing a lot of video production. Where to get an add on for it eludes me, but I'm sure you can find it off that site, but it allows for you to script in python some fairly slick real-time video production.
-- edit --
Right, look at this google code page, it has some video's (picture's worth a thousand words right?), but regardless, it allow's you to mix in 3D content into live-action, through the use of "marker" prop's, essentially bit's of paper with some easily machine recognizable feature's, that facilitate their underlying engine to inject computer rendered output into a real world scene, highly dynamic, so you can toss these marker's around and the 3D content move's fluidly... anyhow good luck.