Hi-
To do this:
!http://www.spotsbeforeyoureyes.com/OffsetCircle.jpg!
Do this:
!http://www.spotsbeforeyoureyes.com/OffsetCircleStack.jpg!
Where V1 has your background video.
V2 will have the Circle that will cut the hole - to make a circle shape, click on the Generator pop-up menu in the bottom right corner of the viewer (the button with the "A" on it) and select Shapes>Circle.
!http://www.spotsbeforeyoureyes.com/MakeACircle.jpg!
Edit the circle shape on to track V2 and apply the effect Luma Key, and with the Luma Key controls, select Key Out Darker. Now you should have a white circle keyed on your background. Adjust to the approximate size you want, and position it where you want the inset image to appear. You can move it my double clicking on it, Clicking on the Motion Tab, and use the Center controls to move the circles position - OR - turn on Image and WIreframe in the canvas:
!http://www.spotsbeforeyoureyes.com/ImageAndWireframe.jpg!
Click in the circle clip in the timeline, click and drag the circle in the canvas to where you want it positioned (you can fine tune everything later). Also, while in the viewer window, click on the control tab and set how soft you want the edge of your circle to be.
Now place the contents of your circle on V3. Control click on the clip on V3 and select Composite Mode>Tavel Matte - Luma. It should then appear contained to the hole cut by the dimensions and positon of the circle on V2, and that will be above the background.
Since everything is on a separate layer, all elements are adjustable to taste. If you want to reposition the effect over the background, just click with the shift key down on the clips on V2,and V3 to select them and move them together.
Hope this helps.
