If your statement about DTivos being able to decode/playback two channels at once - then why do you say 'they will never do PiP as they cannot decode two channels at once, when thats exactly what your Tivo does now?

All PiP would need to do is to 'cut & paste' the second (decoded) channel into a sub-window of the first channel - thats not even a stream decoding issue, thats 'overlay' type operation - something the Tivo does now [albeit with static images only - ala OSD and menus].