YCbCr video at vga

If you want colour at the VGA port first you need a colour space converter. First off, you have to convert the 422 YCbCr data to a 444 data rate (its quite straight forward 0 just hold the Cb and Cr values for 2 clocks). Then you need a 1x3 x 3x4 matrix multiply to convert the colour space to RGB. If you just want black and white, you need to extract Y from the input.

Then, like you fear, you will need to make the video progressive, and possibly upscale/downscale it depending on the output video resolution, as SD video has 768 pixels per line. You will need a field buffer to do this, but a the deinterlacer megafunction may do it (I dont know because I have never used it).