I just tested my capture quality with my current ATI AIW Radeon. It was very good. So good that I don't think I need any better.

Is it possible to use my AIW card for video capture, and have a second card installed for use as my graphics card?

Nope, not easially anyhow. You could add a PCI video card and set the bios up to use it as the primary monitor, and set the AIW as the secondary. The problem with that though is you will need 2 monitors, and there is no way to just disable the video portion of the AIW.

In theory, the ATI TV Wonder PCI card should give your system the same capture capabilities, and free up the AGP slot for other cards. It's page is here: http://www.ati.com/products/pc/tvwonder/index.html

You know what? I seem to have had a temporary lapse. The AGP slot didn't even cross my mind. DUH! Argh I hate when that happens... I'll see what happens...